Payroll Tax Cut to Expire…for now.

The House yesterday rejected the Senate’s proposed 2 month extension of the 2% reduction in the employee’s share of their social security taxes. According to press reports, the House passed a bill which, while not perfect, would at least prevent the looming tax hike for all working Americans, extend additional unemployment benefits and prevent cuts to Medicare providers with another “Doc Fix” for a full year.  Besides these three key policies, the House also included some policies helpful to job creation in trying to get the Obama administration to approve the Keystone oil pipeline (from Canada) project as well as an important change to fix Medicare’s finances, thus strengthening it for seniors today and tomorrow.  This change is crucial toward tackling the nation’s largest and most pressing fiscal issue — our entitlement crisis.

The Senate however decided to pass only a two-month extension of these three policies and then left for vacation.  

The Senate bill also chose to limit the amount of income that qualifies for payroll tax relief “so that upper-income earners don’t get more than their ‘fair share’ of the tax relief during this brief two-month period.” The Senate bill paid for it all by increasing fees on mortgages financed by Fannie Mae and Freddie Mac. 

From a payroll processing objective, the Advisor wishes that the idiots in DC would realize how difficult their inaction makes payroll processing. It leaves so much undone and so many people hanging. Working Americans will have no idea whether or not they’ll suffer a tax hike when the extension expires. Payroll processors will take on additional costs and have to jump through more hurdles in having to change their payroll systems to keep up with Washington’s policy “du jour” — and frankly, it will be an even more difficult for small businesses who do payroll by hand. Time & Pay is ready no matter how the idiots  in DC (who have probably never had a do payroll in their lives) behave.

The Advi$or will keep you posted, but it looks like we will all see a reduction in our net pay come Jan 1, 2012.

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NLRB Approves Union Voting Change

The National Labor Relations Board on Wednesday adopted a rule that will speed union-organizing elections in private-sector workplaces, ushering in some of the biggest procedural changes in decades and scoring a win for unions that say scheduling a vote often takes too long.

The board’s two Democrats approved the rule through electronic voting, while the lone Republican symbolically rejected it by choosing not to vote. The rule takes effect April 30.

The approval drew immediate backlash from employers, who said it leaves them inadequate time to respond to unionization campaigns and limits their rights to legally challenge elections before employee voting occurs.

The U.S. Chamber of Commerce has filed a lawsuit Tuesday night to challenge what it called the “ambush election rule.” The suit, filed in the U.S. District Court for the District of Columbia, claims the rule deprives employers of a fair opportunity to explain to employees the costs of unionizing. The Coalition for a Democratic Workplace is also a plaintiff in the suit.

Labor officials welcomed but downplayed the new rule’s potential impact and said more needs to be done to protect workers’ rights. AFL-CIO President Richard Trumka called the rule a “modest but important step” to help ensure workers get a fair chance to vote on forming a union.

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IRS Announces 2012 Mileage Rates

The IRS announced that the 2012 business mileage rate remains 55.5 cents for business miles driven, the same as the adjusted midyear rate in 2011.

Starting Jan. 1, 2012, the rate for medical or moving purposes will be 23 cents and the rate for miles driven in service of charitable organizations will be 14 cents per mile.

The standard mileage rate for business is based on an annual study by independent contractor Runzheimer International of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs as determined by the same study. Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

EIC Requirements.

The IRS has released its notice that asks employers whether they have notified employees about the Earned Income Credit. The notice gives questions and answers related to notifying employees about the credit and how employees can claim it. This credit is for low income individuals who meet certain income level qualifications (depending on the number of dependents they have)  who may qualify for additional funds from the federal government. These funds are distributed by the IRS upon review of the indivdual’s tax return.

The notice of the EIC is usually printed on the back the the employee’s W-2.

Qualified employees used to be able to add the credit to their regular paycheck. However, employees can no longer claim the advance earned income credit, and Form W-5 is no longer in use.

States that have specific notification requirements related to the federal earned income credit include: California, Delaware, Illinois, Louisiana, Maryland, New Jersey, Texas, and Virginia.

Social Security Rates and Taxes:

As you know, currently in place is a 2% reduction of the employee’s share of the social security tax rate… a reduction from 6.2% to 4.2%. This reduction expires Dec 31, 2011.  The President and Congress are jockeying back and forth working on extending the credit through next year. There are even considerations of extending the 2% credit to the employer also.  Politic pundits predict that it will be extended but with the mess that is Washington, who knows! The Advi$or will keep you posted.

Remember that the taxable wage base for Social Security taxes was increased from $106,800 to $110,100 for 2012, a 3% increase This will add an addition a $138 in social security taxes to those high wage earners (provided the rate remains at 4.2%).

FUTA Rates

Congress is also considering a bill that would extend emergency unemployment benefits another year and allow employers in FUTA credit reduction states (those states being hit by a reduction in the FUTA credit due to funds borrowed from the Federal Government to cover shortfalls in state unemployment benefit funds) to avoid paying the extra FUTA tax required under current law.

Needless to say, payroll professionals are hoping the idiots in Washington, who have probably never done a payroll in their life,  make some decisions soon!

Posted in News

New Bill Restricts Taxation of Multi-state Workers – Tennessee, Virginia Employers Affected

House Committee Bill Would Restrict Taxation, Withholding of Multi-state Workers

Thanksgiving may have been on the mind of legislators as legislation was approved by a voice vote of the House Judiciary Committee on Nov. 17 that would stop states from requiring nonresident workers to pay income tax for less than 30 days of work performed in the state .

The Mobile Workforce State Income Tax Simplification Act would require employees’ earnings to be subject to state income tax and withholding if the employee performs work in the state for more than 30 days during the calendar year. The bill would create a national framework on how to tax mobile workers as a way to clear up a lack of consistency in the states, according to lawmakers.

This has always been an area of confusion with employers particularly as states look to increase tax revenues with increased enforcement of withholding regulations on multi-state workers. This legislation would relieve a lot of the headaches employers suffer through in complying with the withholding regulations for short-term out of state jobs. Employers will be relieved if this legislation becomes law. Time will tell.

Speaking of the holiday, all the staff  here at Time & Pay wants to wish you and yours a Happy Thanksgiving! We all have much to be thankful for in this great country we live in.


Posted in News

Tennessee Opens Small Business Advocate Office

Good news for small business in Tennessee! If you are having trouble with State unemployment taxes, business licences, who to contact to get your business going or who to deal with regarding business issues as they relate to the State of Tennessee, the State now has an Office of Small Business Advocate. Established by legislation in 2010, the Office of Small Business Advocate serves as a point of contact to state government for Tennesseans who are starting a business or who already own a business.

The Goals of the Small Business Advocate are to:

  • Serve as a guide for small business owners to state government
  • Advocate on behalf of small business owners to the Executive Branch
  • Become another voice for small business owners in the legislative process

The State defines small business as a business entity, including all affiliates, that employ 50 or fewer full time employees. The duties of the advocate include answering all questions and providing information to Tennesseans starting a small business or who already own a business. It duties also include informally acting as a mediator and assisting with the resolution of issues concerning small business owners and state departments and agencies. Duties also include working with each state agency and department to ensure that small business owners who receive enforcement related communications or contact by an agency or department are provided with a means to communicate or comment. The advocate will also receive comments from small business owners regarding actions by agency or department employees conducting compliance or enforcement activities. The advocate will also refer comments from small business owners to the affected agency or department.

The Advocates office noted that the identity of all small business owner communications with the Advocate will remain confidential until it becomes necessary to divulge their information to resolve their issue.  The Office also noted that it is responsible for rating each agency or department on their efforts to notify small business owners about the Advocate’s Office.

In order to assist the Advocate, each agency or department with regulatory authority over a business is required to appoint an individual to serve as a contact person for the Advocate’s office.

According to the small business Advocate, small business owners should not have to waste their valuable time figuring out the who, what, where, when and why of State government.

To contact the Office of Small Business Advocate, contact:

Lauren Plunk
505 Deaderick St, Suite 1700
James K Polk Building
Nashville, TN 37243-1402
615-401-7806  or  866-831-3750


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“From the start, Time & Pay has worked with us in many aspects of payroll and HR as we have grown from a single facility to a multi-state operation. They have allowed us to concentrate on that expansion while they have focused on keeping us compliant with payroll and timekeeping regulations. There customer service is exemplary! They are great to work with.”
-J G – Prime Choice Foods, Denver, CO

“Having Time & Pay as a payroll service has been a wonderful partnership. Their customer service, punctuality and attention to detail have surpassed our expectations and we are glad to have them as a partner in conducting all of our payroll functions. I would highly recommend their services to companies, large and small.”  
-T W – Little Things, LLC, Chattanooga, TN

“As a former customer of one of those big national firms, not only does Time & Pay perform better in the payroll processing area with better products and services, but you are also way ahead of them in the customer service area. It is a pleasure working with your staff knowing that any help we need is readily available.”
-C – Comprehensive Community Services, Johnson City, TN

Time & Pay is a  godsend for a small business like mine. I no longer have to worry about paying my employees or my payroll taxes accurately or on time!  Time & Pay takes care of everything for me!
-B M – Stellar Studios, Johnson City, TN

“Time & Pay saved us from hiring another employee to do our payroll. Along with providing great payroll services, they have given us the ability to easily track our labor cost for job costing.”
-J K – American Calendar, Greeneville, TN

“After working with one of the national firms, the transition to Time & Pay was easy and beneficial. Their products and services exceeded what we were getting, were more cost effective, and their customer service goes above and beyond. We are very happy we made the change.”
-R V – Mountain Treasure Corral, Kingsport, TN

“Time & Pay does a great job handling both our corporate and independent store accounts. The flexibility of their on-line capabilities gives us the information we need when we need it. Their response to our diverse needs has been excellent.”
-B G – HobbyTown USA, Omaha, Nebraska

“Opening up a large retail operation, the last thing I wanted to concern myself with was payroll and all the compliance hassles. Time & Pay takes care of all my payroll needs. With their services, my payroll worries are eliminated. We would recommend your services to any one.”
-D K – DW Express LLC, Bristol, VA

“We have been using Time & Pay for a number of years. Their customer service is outstanding. I would recommend their products and services to anyone looking to get the most out of the payroll process and stay compliant with federal and multi-state payroll regulations.”
-M W – Royal Brass, Knoxville, TN

“We had been doing payroll in-house for years and was looking for a cost effective alternative. Your systems and services have been able to provide us with information and reports we were not able to produce with our old system. You have freed our time to concentrate on more important accounting aspects of our business. With the excellent services you provide, we would not consider any other payroll processing system.”
-Kwick-Way Transportation Co, Gray, TN


Payroll, Sick Leave, The ACA and More

A few items regarding payroll and employees… In January, President Obama unveiled new proposals to support and encourage  businesses granting more paid sick leave to employees. In what the administration hopes will “strengthen the middle class by giving working families the … Continue reading



Home Health Care Situation..W-2 or 1099?

We recently had a home health care firm customer describe a situation to us. They have an health care provider who takes care of an individual in their own (the health care provider’s) home. The individual is not related. The … Continue reading



W-2′s and the ACA

The Affordable Care Act (ObamaCare) is raising all kinds of questions for payroll departments as well as tax professionals. Regulations continue to be defined and revised as the program develops. And the IRS recently announced that since they have cut … Continue reading


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