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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.
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The U.S. House of Representatives has rejected a 2-month extension of the payroll tax that the Senate had passed. The payroll tax rate will increase to 6.2%, January 1, 2012, unless the U.S. Senate appoints conferees to work out the differences between the House-passed version (a 1 year extension of the payroll tax) and the Senate-passed version (a two month extension of the payroll tax).
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A hearing officer with the New Mexico Taxation and Revenue Department (TRD) ruled that a taxpayer was liable for New Mexico personal income tax, penalty, and interest for the unreported distribution he received from his former employer's profit-sharing plan and that his former employer was not responsible for withholding state taxes from the distribution.
Two years after being employed by his former employer, the taxpayer contacted his former employer about withdrawing from the company's profit-sharing plan. The former employer provided the taxpayer with a packet of materials that he needed to complete to get a distribution. The former employer informed the taxpayer that federal withholding from the distribution was required, but the former employer did not indicate that it would withhold any amount for New Mexico personal income tax. The taxpayer filed his New Mexico personal income tax return listing a federal adjusted gross income that did not include the distribution from the profit-sharing plan. As a result of this filing, the taxpayer received a New Mexico income tax refund. At some later time, the IRS made a correction to the taxpayer's adjusted gross income as a result of the distribution from the profit-sharing plan and another amount of unreported work income. The taxpayer did not amend his New Mexico return to account for this correction. As a result of the tape match program with the IRS, the TRD learned of this discrepancy and sent the taxpayer a notice of limited scope audit. At the conclusion of this audit, the TRD sent the taxpayer a notice of assessment for personal income tax, penalty and interest.
The taxpayer protested this assessment, arguing that his former employer was responsible for making the proper withholding. However, the taxpayer provided no evidence that he requested any New Mexico withholding from his profit-sharing distribution, and New Mexico's self-reporting tax system dictates that the responsibility for correctly reporting and filing a personal income tax return rests on the taxpayer. As a result, the taxpayer's protest was denied. (In the Matter of the Protest of Benny Nevarez, New Mexico Taxation and Revenue Department, No. 11-30, December 2, 2011.)
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A job creation and retention package and an increase in state income tax exemptions won final approval in the Senate Tuesday afternoon, Dec. 13. The measures now go to the Governor, who is expected to sign them. One of the bills, SB 400, raises the state's Earned Income Tax Credit for low income workers from 5% to 7.5% on January 1, 2012 and then to 10% on January 1, 2013. It also contains a modest hike in the personal deduction for all taxpayers, raising it from $2,000 per person to $2,050 beginning with tax year 2012. In subsequent years, the personal exemption will expand with an annual cost-of-living increase. It was approved on a 48-4 vote.
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Public law 111-312 extended provisions in Public Law 111-92, which amended prior laws to create a Third and Fourth Tier of benefits within the EUC08 program for qualified unemployed workers claiming benefits in high unemployment states. The Department of Labor produces a trigger notice indicating which states qualify for EUC08 benefits within Tiers Three and Four and provides the beginning and ending dates of payable periods for each qualifying state. The trigger notice covering state eligibility for the EUC08 program can be found at: http://ows.doleta.gov/unemploy/claims_arch.asp.
Based on data released by the Bureau of Labor Statistics on September 16, 2011, the three-month average, seasonally adjusted total unemployment rate for Indiana rose to meet the 8.5% threshold to trigger “on” in Tier Four of the EUC08 program. The payable period for Indiana in Tier Four of EUC began October 9.
Based on data released by the Bureau of Labor Statistics on October 7, 2011, the estimated three-month average, seasonally adjusted total unemployment rate for the Virgin Islands rose to exceed the 8.5% threshold to trigger “on” in Tier Four of the EUC08 program. The payable period for the Virgin Islands in Tier Four of EUC began October 23. As a result, the maximum potential duration of 47 weeks will increase to a maximum potential duration of 53 weeks in the EUC08 program.
Based on data released by the Bureau of Labor Statistics on August 19, the three-month average, seasonally adjusted total unemployment rate for West Virginia fell below the 8.5% threshold to remain “on” in Tier Four of the EUC08 program. The week ending September 10, 2011, was the last week in which EUC claimants in West Virginia could exhaust Tier 3, and establish Tier Four eligibility. Under the phase-out provisions, claimants who were in Tier Four can receive any remaining entitlement they have in Tier Four after September 10, 2011; for all other claimants, the maximum potential duration is 47 weeks in the EUC08 program.
Based on data released by the Bureau of Labor Statistics on August 19, the three-month average, seasonally adjusted total unemployment rate for Wyoming fell below the 6.0% threshold to remain “on” in Tier Three of the EUC08 program. The week ending September 10, 2011, was the last week in which EUC claimants in Wyoming could exhaust Tier Two and establish Tier Three eligibility. Under the phase-out provisions, claimants who were in Tier Three can receive any remaining entitlement they had in Tier Three after September 10, 2011; for all other claimants, the maximum potential duration is 34 weeks in the EUC08 program.
Information for claimants. The duration of benefits payable in the EUC program, and the terms and conditions under which they are payable, are governed by Public Laws 110-252, 110-449, 111-5, 111-92, 111-118, 111-144, 111-157, 111-205 and 111-312, and the operating instructions issued to the states by the U.S. Department of Labor.
Individuals who believe they may be entitled to additional benefits under the EUC08 program, or who wish to inquire about their rights under the program, should contact their State Workforce Agency.
For further information, contact Scott Gibbons, U.S. Department of Labor, Employment and Training Administration, Office of Unemployment Insurance, 200 Constitution Ave. N.W., Frances Perkins Bldg., Room S-4524, Washington, DC 20210, telephone number (202) 693-3008 (this is not a toll-free number) or by email to gibbons.scott@dol.gov (76 Fed. Reg. 73685, November 29, 2011; see, also, Ind. ¶1935, V.I. ¶4015, W.Va. ¶1935, Wyo. ¶1935).
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