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With the Ernst & Young Payroll Resource Library, you stay ahead of the trends and developments that affect this complex—and ever-changing—area. By tapping into the experience and observations of Ernst & Young’s employment tax and payroll professionals across the country, the editors of this powerful, online resource help you stay fully aware of the latest events and changes.
Links within news stories display full text documents including legislation, regulations, court decisions, rulings and government reports.
The first time you click on a link you will be taken to the IntelliConnect login page, where you will need to enter your ID and password. Subsequent links will take you directly to the desired document.
The House has passed the Affordable Health Care for America Act, (H.R. 3962) on November 7, 2009. As we go to press, the Senate has not debated or passed its version of health care reform. The bill is intended to provide health care insurance for 96% percent of Americans. It would be paid for by, among other things, an income tax increase for high income earners, changes to information reporting requirements for corporations, limiting contributions to flexible spending accounts, penalties paid by employers who don't obtain coverage, a 2.5% penalty on the income of individuals who don't purchase insurance, and several other corporate taxes and fees. More details on the payroll-related provisions will be reported in the CCH PAYROLL MANAGEMENT GUIDE Report Letter on CD Rom/Internet in future releases.
Employers would be required to provide insurance to employees or pay a penalty of 8% of payroll. Employers with payrolls under $500,000 annually would be exempt. The penalty would be phased in for employers with payrolls between $500,000 and $750,000. Small employers with 10 or fewer workers would get tax credits to help provide coverage.
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The state has amended existing law that requires each state agency, at the time of each payment of salary or wages, to furnish an employee, at his or her discretion, an itemized statement in writing or electronically showing all deductions made from salary or wages. The new law will require that the statement be provided electronically to each employee who has authorized the direct deposit by electronic fund transfer of his or her salary or wages, unless the employee has asked to receive a paper version of the statement. (S.L. 37, Laws 2009, enacted October 11, 2009.)
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The Information Reporting Program Advisory Committee (IRPAC) has released its recommendations on a wide range of tax administration issues, including some payroll-related items. A few of the recommendations are highlighted below.
Logos on substitute returns
IRPAC recommends postponing the general prohibition against including slogans, advertising and logos on substitute information returns, payee statements and employee wage statements reporting amounts paid during the 2010 calendar year as set forth in IRS Rev. Proc. 2008-36 and Rev. Proc. 2008-33. The IRS has agreed.
W-4 instructions for nonresident aliens
IRPAC recommends that the IRS create online Form W-4 instructions for nonresident aliens, in the form of an official Notice, which can be provided separately to individuals to enable them to complete the Form W-4 more accurately. IRPAC drafted a sample Notice for IRS consideration which was submitted to the Large and Mid-Size Business (LMSB) operating division, for technical review and further discussion as required within the Service. The IRS agreed and is moving the supplemental instructions through the appropriate approval steps with the goal to deploy the Notice for tax year 2010. IRPAC will continue to work with IRS on the finalization of the Notice and supplemental W-4 instructions for non-resident aliens.
Misclassified employees
IRPAC recommends additional training and outreach relative to Code Sec. 530 Relief as follows:
(1) IRS Publication 1976, can be emphasized at future IRS tax forums;
(2) IRS and State participation in agency training programs provides an excellent avenue for open discussion with employers and practitioners on ways to help employers manage Section 530 issues; and
(3) the IRS can make employers and practitioners more aware of the issues involved in Section 530 Relief before an audit occurs through communications in employer trade journals or at IRS.gov.
Cell phones
In light of the pending legislation to remove cell phones from the definition of listed property, IRPAC recommends the temporary suspension of enforcement of the listed property rules as they impact cell phone use as well as the related employee income inclusion for personal cell phone use.
(1) IRPAC recommends that employers should establish a policy under which an employee who is provided a cell phone by the employer will agree to maintain and use a non-employer provided cell phone for personal use.
(2) IRPAC recommends that an employer's policy include a definition of appropriate use of employer provided cell phones along the same lines as policies governing use of employer provided computers and other technology.
(3) If an employer provides a cell phone with "unlimited use" or "fixed flat minute" billing and the employees' job requires at least 50% business use, the IRS should assume that the entire cost of the cell phone is business use. (2009 Information Reporting Program Advisory Committee Public Report, IRS New Release IR-2009-97, October 28, 2009.)
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The Effect of No Social Security COLA on Medicare Part B Premiums outlines how Medicare Part B premiums and Social Security cost-of-living adjustments are calculated, and how the COLA affects Part B premiums. It examines a scenario in which Medicare Part B premiums rise but Social Security benefits do not. Part B premiums are based on program costs. Every $1 of premium is matched by $3 from the federal government. A hold harmless provision will reduce an individual's premium to insure that a Social Security check does not decline in amount from one year to the next. In 2010, when Social Security benefits remain flat due to the absence of a COLA, about 75% of Part B participants will be protected by the hold harmless provision. Of the remaining 25%, 17% to 18% have premiums that are fully paid by the Medicaid program, 5% are high-income beneficiaries who are subject to income-related premiums, and 2% are new enrollees. Accordingly, the entire increase in beneficiary costs will be borne by the 25% of beneficiaries not protected by the hold harmless provision.
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Unemployment Insurance Reporter with Social Security provides in-depth coverage of federal and state laws and regulations, including Unemployment Insurance, Social Security, Supplemental Security Income, and Disability. With all the facts and data about taxes and benefits under major subject categories, and expert “plain English” explanations, analyses and indexes, there is no other product that offers the same scope of coverage.
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