Here is our updated chart for State Unemployment insurance wage bases for 2021. Still a few states need to report in but we are getting there. I will update again next week.
Here is our updated chart for State Unemployment insurance wage bases for 2021. Still a few states need to report in but we are getting there. I will update again next week.
It’s that time of year again where we ring out the old year and ring in the new. To ensure that we have our calculations for our state unemployment insurance correct, payroll needs the wage bases for all states where they currently have employees located. The chart below lists the SUI wage bases that have been released so far. I will be updating this blog new wage bases come in.
Since the pandemic of COVID-19 began I have been getting a tremendous amount of questions about the different tax credits and how those tax credits relate to the Form 941. Although I posted quite a few blog items concerning these credits I thought what I might do now is go through the different FAQs that are on the IRS website and take a closer look at specific information the IRS has provided. Over the next several blogs I will pick one or two of the FAQs and discuss them and how they affect payroll and/or the 941 form. I am not going to be covering them in numerical order but rather picking the ones that I think are the most relevant to the questions I have been receiving. I will give the FAQ number and under what topic they can be found, as well as the link if you want more information. One bad thing about the FAQs on this website is if they do jump around quite a bit. You start off at question four and then must wander off to question 44 to get the remainder of the answer. So, what I am going to try to do is put it all in one place. Today’s blog gets us started with our first question.
Under the IRS topic Covid-19-Related Tax Credits: General Information FAQs. FAQ number 4 deals with documentation. The question reads:
What documentation must an eligible employer retain to substantiate eligibility to claim the tax credits?
In this case the question is asking about the tax credits under the paid family leave and paid sick leave along with the allocable qualified health plan expenses and the eligible employer share of Medicare taxes. In answering this question, the IRS is not giving us any specifics when it comes to the type of records that we need to maintain. They simply list the normal records that we would maintain in a payroll department including Form 941. However, they do refer to another FAQ, specifically number 44 under the IRS Topic Covid-19-Related Tax Credits: How To Substantiate Eligibility And Periods Of Time For Which Credits Are Available FAQs. But to truly answer the question we not only need number 44 but also number 45 and number 46 under this topic.
Number 44 reads: what information should an eligible employer received from an employee and maintain to substantiate eligibility for the sick leave our family leave credits? The answer provided is as follows: An Eligible Employer will substantiate eligibility for the sick leave or family leave credits if the employer receives a written request for such leave from the employee in which the employee provides:
In the case of a leave request based on a quarantine order or self-quarantine advice, the statement from the employee should include the name of the governmental entity ordering quarantine or the name of the health care professional advising self-quarantine, and, if the person subject to quarantine or advised to self-quarantine is not the employee, that person’s name and relation to the employee.
In the case of a leave request based on a school closing or child care provider unavailability, the statement from the employee should include the name and age of the child (or children) to be cared for, the name of the school that has closed or place of care that is unavailable, and a representation that no other person will be providing care for the child during the period for which the employee is receiving family medical leave and, with respect to the employee’s inability to work or telework because of a need to provide care for a child older than fourteen during daylight hours, a statement that special circumstances exist requiring the employee to provide care.
But that still does not tell us exactly what that documentation should look like. That is addressed in question number 45, which reads: what additional records should an eligible employer maintained to substantiate eligibility for the sick leave or family leave credit? This answer gets down to the actual documentation from the payroll system. The employer would need to create and maintain records that include the documentation to show how the employer determine the amount of qualified second family leave wages paid to employees are eligible for the credit, including records of work, telework and qualified sick leave and qualified family leave. The documentation should also show how the employer determine the amount of qualified health plan expenses that the employer allocated to those wages. This of course is in addition to the completed 941 form and any copies of Form 7200. These records could come from your payroll system directly via a report, or if that is not possible, an Excel spreadsheet.
Finally question number 46 deals with record retention time limits. Covid-19 related records fall under the same category as all other employment tax records. This is basically four years plus current.
The U.S. Department of Labor will host four webinars in June and July to discuss how the Department is helping workers and employers by reducing regulatory burdens and making it easier to understand and comply with the law. The webinars will also provide an opportunity for workers, employers, and state and local governments to ask questions and discuss how the Department can expand and improve access to its compliance assistance materials.
All events will include U.S. Department of Labor Deputy Assistant Secretary for Policy Jonathan Wolfson.
The webinars will be hosted by the Department’s Office of the Assistant Secretary for Policy and its Office of Compliance Initiatives. Attendance is free, but attendees must pre-register online. If you have questions, please contact Marisela Douglass at douglass.marisela@dol.gov.
The four webinars are:
Agriculture
Guest Speaker: Wage and Hour Division Administrator Cheryl Stanton
Tuesday, June 23, 2020, 1:00 p.m. to 2:15 p.m. EDT
Register at: Compliance Assistance Webinar 1
Manufacturing and Construction
Guest Speaker: Occupational Safety and Health Administration Principal Deputy Assistant Secretary Loren Sweatt
Thursday, June 25, 2020, 1:00 p.m. to 2:15 p.m. EDT
Register at: Compliance Assistance Webinar 2
Food Service, Hospitality, and Retail
Guest Speaker: Employment and Training Administration Deputy Assistant Secretary Amy Simon
Tuesday, June 30, 2020, 1:00 p.m. to 2:15 p.m. EDT
Register at: Compliance Assistance Webinar 3
Health Care and Emergency Responders
Guest Speaker: Employee Benefits Security Administration Acting Assistant Secretary Jeanne Klinefelter Wilson
Wednesday, July 1, 2020, 1:00 p.m. to 2:15 p.m. EDT
Register at: Compliance Assistance Webinar 4
The U.S. Department of Labor (DOL) has issued three new opinion letters that address compliance issues related to the Fair Labor Standards Act (FLSA). As a reminder to my readers, an opinion letter is an official, written opinion by the DOL’s Wage and Hour Division (WHD) on how a particular law applies in specific circumstances presented by the employer that requested the letter. The current group of letters issued include:
FLSA2020-3: Addresses excludability of longevity payments from the regular rate of pay. This opinion rules that longevity payments made to employees that clearly “must or shall” be paid cannot be excluded and must be used to calculate the regular rate of pay. However, if the longevity payment is worded as that it may or may not be awarded, up to the discretion of the employer, then it would not need to be included in the calculation for regular rate of pay.
FLSA2020-4: Addresses excludability of referral bonuses from the regular rate of pay. The employer is offering a referral bonus to employees not involved in recruiting or human resources and would be issued in two parts, one immediately and one if the employee is still employed after a year and so is the employee who was referred. The opinion states that the first portion of the bonus would not be included in the regular rate of pay calculations as it is not remuneration for employment as it is a voluntary program. However, the second installment of the bonus would be included as it would be considered the same as a longevity bonus. If the employee received the bonus whether they were still employed or not, it would not be includable.
FLSA2020-5: Addresses excludability of an employer’s contributions to a group-term life insurance policy from the regular rate of pay. In essence, the opinion states that just because a wage paid is subject to federal taxes under the Internal Revenue Code, does not make the same payment includable in the regular rate of pay.
For more information on opinion letters, see the WHD website.
Today is the last day to register for our upcoming webinar, Form 941: CCOVID-19 Edition being held tomorrow. The passage of the Families First and Cares Acts have caused massive changes to IRS Form 941 that affect the final three quarters in 2020! 16 new lines now appear on this form along with changes to two others! Are you ready to meet these changes and handle them correctly? Join me tomorrow, Thurs., May 28th at 10 am Pacific as I examine the Form 941–COVID-19 edition in depth. Use coupon code cjyfrqa6 at checkout for a 10% discount.
The webinar will cover:
Submitted to the APA for approval for 1.5 RCHs
The Office of Child Support Enforcement published a guide for employers to begin sending child support payments electronically. According to the guide:
All states and territories accept child support payments at their State Disbursement Unit (SDU) by Electronic Funds Transfer (EFT)/Electronic Data Interchange (EDI), the primary method of sending payments electronically. The EDI portion of the transmission includes identifying information so the payment can be properly credited to the payor’s case(s). SDUs centralize the collection and disbursement of all child support payments withheld by employers as well as other types of payments. Using EFT/EDI is well worth the initial effort. Employers that switch from sending paper checks to electronic payments will enjoy lower costs, fewer errors, and faster processing.
There are several ways to send a child support payment electronically:
There are standard record specifications for child support payments. NACHA (National Automated Clearing House Association) publishes the User Guide for Electronic Child Support Payments (PDF)visit disclaimer page to provide SDUs, employers, and their financial institutions with current formats, definitions, and implementation recommendations to remit child support payments and payment information electronically through the ACH network using current conventions and standards.
The passage of the Families First and Cares Acts have caused massive changes to IRS Form 941 that affect the final three quarters in 2020! 16 new lines now appear on this form along with changes to two others! Are you ready to meet these changes and handle them correctly? Join me on Thurs., May 28th at 10 am Pacific as I examine the Form 941–COVID-19 edition in depth. Use coupon code cjyfrqa6 at checkout for a 10% discount.
The webinar will cover:
Submitted to the APA for approval for 1.5 RCHs
In news for tax professionals and small businesses, the IRS has advised those who are beginning to deal with Form 7200, Advance Payment of Employer Credits Due to COVID-19 to do so carefully to avoid making error when completing the new form. Mistakes in completing the form can lead to processing delays, which in turn delays the IRS approving the credits.
Background: The Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief and Economic Security or CARES Act both provide refundable tax credits for the employer. FFCRA requires employers (of a certain size) to provide paid sick leave or paid family leave. To offset the cost of this leave, the employer is permitted to take refundable tax credits against employment taxes. The CARES Act permits the employer to take a “employee retention credit” equal to 50% of “qualified wages”. This is also offset against employment taxes. However, it is possible for these credits to exceed the employer’s actual tax deposits. In this case, the employer is permitted to receive the excess paid leave credits or the employee retention credit in advance by using Form 7200.
However, the IRS has noted some common errors or mistakes in filling out the form, slowing the process. The errors to avoid include:
Also, Form 7200 may be signed by a duly authorized agent of the Eligible Employer if a valid Form 2848 (Power of Attorney and Declaration of Representative) has been filed.
For more information about Form 7200 and its use can be found on IRS.gov: About Form 7200, Advance Payment of Employer Credits Due to COVID-19.
On May 20, 2020, the U.S. Department of Labor Wage Hour Division (WHD) announced a final rule that allows employers to pay bonuses or other incentive-based pay to salaried, nonexempt employees whose hours vary from week to week. The final rule clarifies that payments in addition to the fixed salary are compatible with the use of the fluctuating workweek method under the Fair Labor Standards Act (FLSA).
In the final rule, the Department:
Example 1: Suppose an employee were paid $491 in fixed weekly salary plus an $8 per hour nightshift premium. In a week in which the employee works 50 hours, including 4 hours for which the employee receives the nightshift premium, the employee’s straight time pay is $523 ($491 salary plus $32 nightshift premium), and the regular rate is $10.46. The employer need only pay an additional $5.23, half time the regular rate, for each of the 10 overtime hours, for a total of $52.30. The payment of the $8 nightshift premium is reflected in this fluctuating workweek method computation. The fluctuating workweek method therefore correctly computes overtime pay owed under the FLSA when an employee receives a fixed salary and hours based premiums that compensate him or her for all hours worked.
For a complete text of the rule proposal visit the DOL website.