New Website by SSA…What’s New for 2022

The Social Security Administration has sets up a What’s New for 2022 internet site.  In it users find links to the tutorial and training package that may be useful for users on SSA’s new Wage File Upload process that will go into production in December 2021. The SSA nows offer a new way to upload W-2 files if it meets the specifications (EFW2).

  • Wage File Upload, available through our Business Services Online (BSO), will process your file and provide results in real-time. You will receive a receipt right away indicating Success or Errors.
  • If your file is rejected, we will provide you the errors right on the screen.
  • You will not receive a Wage File Identifier (WFID) until you have fixed the errors and your file has passed all edits For more information.

For more information, read the tutorial , view the infographic, view the video and, read the training package. (SSA communication, September 30, 2021).

IRS Advises Taxpayers to Take a Fresh Look as 2021 Year-End Nears

The Internal Revenue Service reminds taxpayers that the last quarter of 2021 is a good time to check withholding. Life brings constant changes to individual financial situations. Events like marriage, divorce, a new child or home purchase can all be reasons to adjust withholding. The convenient Tax Withholding Estimator, also available in Spanish, will help taxpayers determine if they have too much withheld and how to make an adjustment to put more cash into their own pocket now. In other cases, it will help taxpayers see that they should withhold more or make an estimated tax payment to avoid a tax bill when they file their tax return next year.

Items that may affect 2021 taxes

Things to consider when adjusting withholding for 2021 are:

  • Coronavirus tax relief – Tax help for taxpayers, businesses, tax-exempt organizations and others – including health plans – affected by coronavirus (COVID-19).
  • Disasters such as wildfires and hurricanes – Special tax law provisions may help taxpayers and businesses recover financially from the impact of a disaster, especially
    when the federal government declares their location to be a major disaster area.
  • Job loss – IRS Publication 4128, Tax Impact of Job Loss (.pdf), explains how this unfortunate circumstance can create new tax issues.
  • Workers moving into the gig economy due to the pandemic – IRS advises people earning income in the gig economy to consider estimated tax payments to avoid a
    balance or penalties when they file.
  • Life changes such as marriage or childbirth – Getting married or having a child are just a couple of life events that can affect your refund or how much you owe.

Pay as you go
Taxes are generally paid throughout the year whether from salary withholding, quarterly estimated tax payments or a combination of both. About 70% of taxpayers, however, over
withhold their taxes every year, which typically results in a refund. The average refund in 2021 was more than $2,700. Taxpayers can pay online, by phone or from the IRS2Go app. They can schedule payments for future dates, which can be useful during filing season, for payment plan payments or for estimated tax payments.

Taxpayers can also log into their IRS.gov/account to view the amount they owe, their payment plan details and options, their payment history (up to 5 years), any scheduled or pending
payments, and key tax return information from their most recent tax return.

Tax Withholding Estimator
The IRS Tax Withholding Estimator makes it easier for everyone to have the right amount of tax withheld. This is especially important for anyone who faced an unexpected tax bill or a penalty
when they filed this year, or whose jobs or tax circumstances have changed during the year. The tool offers workers, as well as retirees, self-employed individuals and other taxpayers, a
user-friendly, step-by-step tool for effectively tailoring the amount of income tax they have withheld from wages and pension payments. For more information about taxes, estimated taxes and tax withholding, see Tax Withholding at IRS.gov.

NY Paid Family Leave..All the Info You Need

I received this notification via email.  I thought it was a valuable resource on the state’s paid family leave so I am passing it along in case you need the info but did not receive the notice.  I hope it is helpful.

Starting next week, the New York State Workers’ Compensation Board will host Paid Family Leave webinars for employers and HR professionals.

Each one-hour session will provide an overview of the state’s landmark Paid Family Leave benefit, including benefit and contribution rate information for 2022, employers’ role in the request process, and updated resources you can use to share Paid Family Leave information with your employees. We’ll also leave time at the end to answer any questions you may have.

Paid Family Leave is employee-paid insurance that provides employees with job-protected, paid time off from work to bond with a new child, care for a family member with a serious health condition, or assist when a spouse, domestic partner, child or parent is deployed abroad on active military service. As of March 2020, Paid Family Leave may also be available in the event an employee, or their minor dependent child, is subject to a mandatory or precautionary order of quarantine or isolation due to COVID-19.

Registration is not required. To join, please select the “Join webinar” link below. Add it to your calendar so you don’t forget!

Paid Family Leave for Employers/HR Professionals
Thursday, October 14, 2021
12:00 P.M. – 1:00 P.M.
Join webinar
Add to your calendar!

Thursday, October 21, 2021
12:00 P.M. – 1:00 P.M.
Join webinar
Add to your calendar!


Additional Paid Family Leave resources are available

New York State offers complete details on Paid Family Leave at PaidFamilyLeave.ny.gov, including updates for 2022 and COVID-19. The employer page also contains helpful resources, including employer formsfact sheets and past webinars. Help is also available via a toll-free Paid Family Leave Helpline at (844) 337-6303, Monday through Friday, 8:30 a.m. – 4:30 p.m.


Having trouble?

If you are having trouble registering for or attending any webinar, check out these Webinar FAQs.

Rescission of Joint Employer Status Under the Fair Labor Standards Act Rule Is Now Effective…Tomorrow

The U.S. Department of Labor announced, on September 20, 2021, the extension of the effective date of a final rule to rescind an earlier rule, “Joint Employer Status under the Fair Labor Standards Act,” that took effect in March 2020. The original Sept. 28, 2021, effective date of the rescission is now Oct. 5, 2021.

On March 12, 2021, the department issued a notice of proposed rulemaking proposing to rescind the March 2020 Joint Employer Rule. After reviewing the comments submitted in response to the Notice of Proposed Rulemaking, the department decided to finalize the rescission of the rule. The department believes that the rule narrowed the test for vertical joint employment improperly and conflicted with decades of department interpretation, the text of the Fair Labor Standards Act, and congressional intent.

The rescission will result in the removal and reserving of part 791 of Title 29 of the Code of Federal Regulations in its entirety. The department will continue to consider legal and policy issues relating to FLSA joint employment before determining whether alternative regulatory or sub-regulatory guidance is appropriate.

The FLSA requires covered employers to pay employees at least the federal minimum wage for every hour they work and overtime compensation at not less than one-and-one-half times their regular rate of pay for every hour they work over 40 in a workweek. A strong joint employer standard is critical because FLSA responsibilities and liability for worker protections do not apply to a business that is not the employee’s employer.

 

Reporting COVID Sick and Family Leave in 2021–Same as 2020

The Treasury Department and the Internal Revenue Service in September issued Notice 2021-53, which provides guidance to employers about reporting on Form W-2 the amount of qualified sick and family leave wages paid to employees for leave taken in 2021. The notice provides guidance under recent legislation, including: the Families First Coronavirus Response Act (FFCRA), as amended by the COVID-Related Tax Relief Act of 2020, and the American Rescue Plan Act of 2021.

Employers will be required to report these amounts to employees either on Form W-2, Box 14, or in a separate statement provided with the Form W-2. The guidance provides employers with model language to use as part of the Instructions for Employee for the Form W-2 or on the separate statement provided with the Form W-2.

The wage amount that the notice requires employers to report on Form W-2 will provide employees who are also self-employed with the information necessary to determine the amount of any sick and family leave equivalent credits they may claim in their self-employed capacities.

In July 2020, the IRS issued Notice 2020-54, which provided guidance regarding W-2 reporting of qualified sick leave and family leave under FFCRA for wages paid to employees for leave taken in 2020.

Additional information about tax relief for employers affected by the COVID-19 pandemic can be found on IRS.gov.

Taking Employees Tips? Not So Fast Says the DOL!

The U.S. Department of labor has announced a final rule that restores the department’s ability to assess civil money penalties against employers who take tips earned by their employees. The rules apply regardless if the violations are willful or not.  The ruling also clarifies specific occasion when a manager or a supervisor can keep tips.  The news release, issued on September 23, 2021 is as follows:

The U.S. Department of Labor today announced a final rule that restores the department’s ability to assess civil money penalties against employers who take tips earned by their employees, regardless of whether those violations are repeated or willful. In addition, today’s rule modifies the department’s broader civil money penalties regulations addressing when a violation is willful, further aligning these regulations with applicable precedent and how the department litigates willfulness. The rule also allows managers and supervisors to contribute to valid tip pooling arrangements, without receiving tips from those pools.

“Workers who depend on tipped wages are every bit as entitled to expect to keep what they’ve earned as other workers,” said U.S. Secretary of Labor Marty Walsh. “An employer who withholds workers’ tips in violation of the law deprives them of that security and, in some cases, leads to workers earning less than the federal minimum wage. This final rule helps us protect their earnings by strengthening tools to hold employers legally responsible for those violations.”

With this rule’s publication, the department withdraws the civil money penalties’ provisions in the 2020 Tip final rule that would have allowed the department to assess these penalties for violations only when employers kept employees’ tips and the department found their violations to be repeated or willful. The Consolidated Appropriations Act of 2018 allows the department to impose civil money penalties to $1,100 when employers keep employees’ tips – in violation of the law – regardless of whether violations are repeated or willful.

The final rule also clarifies that – while managers and supervisors may not receive tips from mandatory tip pools or tip-sharing arrangements – managers or supervisors may contribute to mandatory tip pools or sharing arrangements. In addition, the rule clarifies that a manager or supervisor may keep tips only when the manager or supervisor receives tips from customers directly for service a manager or supervisor directly and “solely” provides.

“The final rule announced today strengthens protections for tipped workers – who are largely women, immigrants and people of color – and advances equity in the workplace,” said Wage and Hour Division Acting Administrator Jessica Looman. “Civil money penalties are an incentive for employers to comply with their legal responsibilities. When they do comply, essential workers benefit. When employers don’t comply, these penalties are a useful enforcement tool we can use to help achieve compliance.”

The Fair Labor Standards Act allows employers with tipped workers to pay as little as $2.13 per hour in direct wages, while taking a credit against the tips earned by the employee to make up the balance of the federal minimum wage of $7.25 per hour.

 

What’s The IRS Been Up to During the Pandemic? Let The Commissioner Fill You In

Chuck Rettig is the 49th Commissioner of the IRS. As Commissioner, Rettig presides over the nation’s tax system, which collects more than $3.5 trillion in tax revenue each year. This revenue funds most government operations and public services. He manages an agency of about 80,000 employees and a budget of approximately $11 billion. In a recent post to the ” A Closer Look” page on the IRS website,  Mr. Rettig gave an upfront and closer look to the work the IRS has been doing during the pandemic.  He discusses in his post how pandemic-related issues are still causing the IRS to experience record levels of activity and despite all that, the agency is making progress and is serving taxpayers.  Here is the text of his September 14, 2021 column:

The IRS plays an important role in serving our country. We interact with more Americans than any other U.S. government agency – virtually every individual and business in the country. We process 96 percent of the funding for our nation’s vital programs, but our agency and our people have had to really step up in the past year and a half to provide even more support to Americans in need. And just like businesses and other agencies around the country, we had to pause or modify some operations during the pandemic until we had safe and secure remote options in place to enable our employees to perform their work and serve taxpayers. I am extremely proud of the dedication of our workforce toward helping American taxpayers fulfill their tax responsibilities and resolve tax issues while they dealt with the COVID-19 situation.

While we had to temporarily scale back operations, important economic relief measures passed by Congress during the pandemic gave us many new responsibilities, and we have proudly worked to deliver Economic Impact Payments, advance payments of the Child Tax Credit (CTC) and many other critical initiatives in 2020 and 2021. We appreciate and understand the frustration caused by the high volume of manually processed returns, the limited information available to taxpayers about the status of the return processing, the refund delays, and the difficulty reaching IRS employees. We also understand that complex tax issues, recent legislation and the pandemic have  record numbers of taxpayers looking for help.

At every turn, our employees have gone above and beyond during the pandemic to keep our operations going, and through it all, we have appreciated the patience and understanding of taxpayers and the tax community. Even so, and despite our best efforts, pandemic-related issues are still causing us to experience record levels of activity that continue to affect operations across the agency, including the processing of tax returns and refunds. To put this in perspective, the IRS has received 199 million phone calls the first six months of this year – five times the normal annual volume – and we have manually reviewed 11 times more tax returns this year (11 million) to correct errors and gather missing information from taxpayers.

I am committed to ensuring the IRS will continue to do all we can to serve taxpayers. During the pandemic, we have had to find new ways to pursue our mission. As we faced enormous challenges, we didn’t always get it right, but we worked hard, often with limited resources. Where possible, we have redeployed resources to accommodate the increased demand. Our goal is to provide the quality of assistance taxpayers deserve, but we have been unable to satisfy this goal despite recent efforts to overcome significant challenges. On behalf of the entire IRS workforce, I want to assure you we will continue making progress, working together with Congress, the Administration and our partners inside and outside the tax community.

We know this has been and continues to be a frustrating time for many taxpayers and tax professionals – and it’s been a challenging time for all of us at the IRS as well. We have done the best we could under the circumstances, and we will continue to do our best as we face the current challenges. Our response to the unprecedented COVID challenges – including issuing almost $1.5 trillion in combined historic economic relief and individual refunds – illustrates the importance of every American to the IRS and the importance of the IRS to every American. I want to give you a glimpse of what we’re facing inside the IRS, and what we’re doing – to help struggling taxpayers and to get caught up during this unprecedented time.

 

APA Recommends Simplified Version of Form W-4

The American Payroll Association has sent a letter to the Internal Revenue Service (IRS) recommending that the IRS create a new and separate W-4 form for employees who have a single job and no dependents.  The form, Form W-4SN, Employee’s Withholding Certificate — Single Job, No Dependents, would be used by employees whose situation would allow them simply to complete Form W-4, Employee’s Withholding Certificate, Steps 1, 4(c), and 5.

As most payroll professionals know, employees continue to struggle with completing the Form W-4 in its current form.  They find it difficult to understand the instructions and many times complete the form in error or in a manner that makes it invalid and cannot be processed by payroll. The APA believes that a simplified version using Steps 1, 4(c), and 5 can be implemented effectively for improved accuracy and without creating confusion for employees.

The APA worked with the IRS during the initial stakeholder engagement for the 2020 Form W-4 and a simplified version of the form was discussed back then. However, it was rejected because of the complications of programming and tracking. The new recommended form maintains the same lines and boxes as found on the current Form W-4. This eliminates the original issues with programming and tracking.

The APA attached a sample of the form W-4SN to help explain its recommendations.

The APA is recommending a six-month effective date to allow for payroll software adjustments, payroll training, and employee awareness.

What do you think?  Let us know your opinion of the recommended form in the comments section.

About the APA: Established in 1982, APA is a not-for-profit association serving the interests of more than 20,000 payroll professionals nationwide. APA’s primary mission is to educate its members and the payroll industry about best practices associated with paying America’s workers while complying with applicable federal, state, and local laws and regulations. APA members are directly responsible for calculating wages and employment taxes for their employers.

Independent Contractors–An IRS Reminder

The IRS recently issued a reminder to small businesses to be sure to correctly identify workers as employees or independent contractors during National Small Business Week. An employee is generally considered to be anyone who performs services, if the business can control what will be done and how it will be done. What matters is that the business has the right to control the details of how the worker’s services are performed. Independent contractors are normally people in an independent trade, business or profession in which they offer their services to the public. Doctors, dentists, veterinarians, lawyers, accountants, contractors, subcontractors, public stenographers or auctioneers are generally independent contractors.

Independent contractor vs. employee
Whether a worker is an independent contractor or an employee depends on the relationship between the worker and the business. Generally, there are three categories to examine:

  • Behavioral Control − does the company control or have the right to control what the worker does and how the worker does the job?
  • Financial Control − does the business direct or control the financial and business aspects of the worker’s job. Are the business aspects of the worker’s job controlled by the payer? (Things like how the worker is paid, are expenses reimbursed, who provides tools/supplies, etc.)
  • Relationship of the Parties − are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

Misclassified worker
Misclassifying workers as independent contractors adversely affects employees because the employer’s share of taxes is not paid, and the employee’s share is not withheld. If a business misclassified an employee without a reasonable basis, it could be held liable for employment taxes for that worker. Generally, an employer must withhold and pay income taxes, Social Security and Medicare taxes, as well as unemployment taxes. Workers who believe they have been improperly classified as independent contractors can use IRS Form 8919, Uncollected Social Security and Medicare Tax on Wages (.pdf) to figure and report their share of uncollected Social Security and Medicare taxes due on their compensation.

Voluntary Classification Settlement Program
The Voluntary Classification Settlement Program (VCSP) is an optional program that provides taxpayers with an opportunity to reclassify their workers as employees for future tax periods for employment tax purposes with partial relief from federal employment taxes for eligible taxpayers that agree to prospectively treat their workers (or a class or group of workers) as employees. Taxpayers must meet certain eligibility requirements, apply by filing Form 8952, Application for Voluntary Classification Settlement Program, and enter into a closing agreement with the IRS.

Who is self-employed?
Generally, someone is self-employed if any of the following apply to them.

Self-employed individuals generally are required to file an annual tax return and pay estimated tax quarterly. They generally must pay self-employment tax (Social Security and Medicare tax) as well as income tax. Self-employed taxpayers may be able to claim the home office deduction if they use part of a home for business.

What about the gig economy?
The gig economy − also called sharing economy or access economy−is activity where people earn income providing on-demand work, services or goods. Gig economy income must be reported on a tax return, even if the income is: from part-time, temporary or side work; not reported on a Form 1099-K, 1099-MISC, W-2 or other income statement; or paid in any form, including cash, property, goods or virtual currency.

Help spread the word – Advance Child Tax Credit
The IRS  encourages employers to help get the word out about the advanced payments of the Child Tax Credit during Small Business Week. Employers have direct access to many  who may receive this credit. More information on the Advanced Child Tax Credit is available on IRS.gov. The website has tools employers can use to deliver this information, including e-posters, drop-in articles (for paycheck stuffers, newsletters) and social media posts to share.

For more information and help
The Self-Employed Individuals Tax Center has information for those who are in an independent trade, business or profession in which they offer their services to the general public.

Small Business Taxes: The Virtual Workshop is composed of nine interactive lessons designed to help new small business owners learn their tax rights and responsibilities.

The IRS Video Portal contains video and audio presentations on topics of interest to small businesses, individuals and tax professionals.

 
 

Retention Credit Guidance Update–Direct from IRS

During this time, many payroll departments need guidance on the final using of retention credits. The IRS furnished excellent guidance on this subject in early August. Hope you find it helpful in your department.

 The Treasury Department and the Internal Revenue Service has issued further guidance on the employee retention credit, including guidance for employers who pay qualified wages after June 30, 2021, and before January 1, 2022, and additional guidance on miscellaneous issues that apply to the employee retention credit in both 2020 and 2021. Notice 2021-49 amplifies prior guidance regarding the employee retention credit provided in Notice 2021-20 and Notice 2021-23.

Notice 2021-49 addresses changes made by the American Rescue Plan Act of 2021 (ARP) to the employee retention credit that are applicable to the third and fourth quarters of 2021.

Those changes include, among other things, (1) making the credit available to eligible employers that pay qualified wages after June 30, 2021, and before January 1, 2022, (2) expanding the definition of eligible employer to include “recovery startup businesses”, (3) modifying the definition of qualified wages for “severely financially distressed employers”, and (4) providing that the employee retention credit does not apply to qualified wages taken into account as payroll costs in connection with a shuttered venue grant under section 324 of the Economic Aid to Hard-Hit Small Businesses, Non-Profits, and Venues Act, or a restaurant revitalization grant under section 5003 of the ARP.

Notice 2021-49 also provides guidance on several miscellaneous issues with respect to the employee retention credit for both 2020 and 2021. This guidance responds to various questions that the Treasury Department and the IRS have been asked about the employee retention credit, including:

  • The definition of full-time employee and whether that definition includes full-time equivalents,
  • The treatment of tips as qualified wages and the interaction with the section 45B credit,
  • The timing of the qualified wages deduction disallowance and whether taxpayers that already filed an income tax return must amend that return after claiming the credit on an adjusted employment tax return, and
  • Whether wages paid to majority owners and their spouses may be treated as qualified wages.

Reporting

Eligible employers will report their total qualified wages and the related health insurance costs for each quarter on their employment tax returns (generally, Form 941) for the applicable period. If a reduction in the employer’s employment tax deposits is not sufficient to cover the credit, certain employers may receive an advance payment from the IRS by submitting Form 7200, Advance Payment of Employer Credits Due to COVID-19.

Where can I find more information on the employee retention credit and other COVID-19 economic relief efforts?

Treasury and the IRS continue to closely monitor pending legislation related to the employee retention credit and will provide additional information as needed.

Updates on the implementation of this employee retention creditFrequently Asked Questions on Tax Credits for Required Paid Leave  and other information can be found on the Coronavirus page of IRS.gov.