Daily News Updates for January, 2022

A bit more of a change up for the new year.  Several of my followers have noted that having one blog for news updates per month would be easier rather than breaking it up by week.  To further refine my new blogs I will do one for each month, in this case January, and update daily as my news letters go out.  I hope you find this helpful.

January 25, 2022: IRS: The IRS has issued guidance for employers regarding the retroactive termination of the Employee Retention Credit. Notice 2021-65 applies to employers that paid wages after September 30, 2021 and received an advance payment of the Employee Retention Credit for those wages or reduced employment tax deposits in anticipation of the credit for the fourth quarter of 2021 but are now ineligible for the credit due to the change in the law.

January 14, 2022: Virginia:  The Department of Taxation has revised the Income Tax Withholding Guide for Employers with a January 2022 revision date. The Guide was last revised November 2021. There are no substantive changes. The tax tables are not changed.

January 6, 2022: On the payroll industry phone call this morning the IRS stated to my question that it has still not issued guidance on the electronic filing threshold for Forms W-2 for 2021 W-s filed by 1-31-22. It could be 100 or more or still 250 or more.

January 4, 2022:   Form W-4 has been finalized for 2022. It is available on the IRS website.

 

 

 

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IRS Issues Guidance on ERC for 4th Quarter

Editor’s Note: The Internal Revenue Service today issued guidance for employers regarding the retroactive termination of the Employee Retention Credit. I have included the entire email breakdown provided by the IRS with the Notice for you in this blog. Use the link to access the actual notice for more info.

The Infrastructure Investment and Jobs Act, which was enacted on Nov. 15, 2021, amended the law so that the Employee Retention Credit applies only to wages paid before October 1, 2021, unless the employer is a recovery startup business. Notice 2021-65 applies to employers that paid wages after September 30, 2021, and received an advance payment of the Employee Retention Credit for those wages or reduced employment tax deposits in anticipation of the credit for the fourth quarter of 2021, but are now ineligible for the credit due to the change in the law. The notice also provides guidance regarding how the rules apply to recovery startup businesses during the fourth quarter of 2021.

Employers who Received Advance Payments

Generally, employers that are not recovery startup businesses and received advance payments for fourth quarter wages of 2021 will avoid failure to pay penalties if they repay those amounts by the due date of their applicable employment tax returns.

Employers who Reduced Employment Tax Deposits

Employers that reduced deposits on or before Dec. 20, 2021, for wages paid during the fourth calendar quarter of 2021 in anticipation of the Employee Retention Credit and that are not recovery startup businesses will not be subject to a failure to deposit penalty with respect to the retained deposits if—

 

  • The employer reduced deposits in anticipation of the Employee Retention Credit, consistent with the rules in Notice 2021-24,
  • The employer deposits the amounts initially retained in anticipation of the Employee Retention Credit on or before the relevant due date for wages paid on December 31, 2021 (regardless of whether the employer actually pays wages on that date). Deposit due dates will vary based on the deposit schedule of the employer, and
  • The employer reports the tax liability resulting from the termination of the employer’s Employee Retention Credit on the applicable employment tax return or schedule that includes the period from October 1, 2021, through December 31, 2021. Employers should refer to the instructions to the applicable employment tax return or schedule for additional information on how to report the tax liability.

Due to the termination of the Employee Retention Credit for wages paid in the fourth quarter of 2021 for employers that are not recovery startup businesses, failure to deposit penalties are not waived for these employers if they reduce deposits after Dec. 20, 2021. If an employer does not qualify for relief under this Notice, it may reply to a notice about a penalty with an explanation and the IRS will consider reasonable cause relief.

IRS Releases 2022 Retirement Plan Limits

Section 415 of the Internal Revenue Code (“Code”) provides for dollar limitations on benefits and contributions under qualified retirement plans. Section 415(d) requires that the Secretary of the Treasury annually adjust these limits for cost-of-living increases. The IRS released Notice 2021-61 (PDF) to provide for cost-of-living adjustments to dollar limitations for retirement plan benefits and contributions. This includes the following:

  • Annual benefit under a defined benefit plan under section 415(b)(1)(A) of the Code is increased from $230,000 to $245,000
  • The limitation for defined contribution plans under section 415(c)(1)(A) is increased in 2022 from $58,000 to $61,000.
  • The limitation under section 402(g)(1) on the exclusion for elective deferrals described in section 402(g)(3) is increased from $19,500 to $20,500.
  • The annual compensation limit under sections 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii) is increased from $290,000 to $305,000.
  • The dollar limitation under section 416(i)(1)(A)(i) concerning the definition of “key employee” in a top-heavy plan is increased from $185,000 to $200,000.
  • The limitation used in the definition of “highly compensated employee” under section 414(q)(1)(B) is increased from $130,000 to $135,000.

 

Tip Work Yes or No?

On October 28, 2021, the U.S Department of Labor announced publication of the Tips Dual Jobs final rule that sets reasonable limits on the amount time an employer can take a tip credit when a tipped worker isn’t doing tip producing work. It clarifies that an employer may take a tip credit only when an employee is performing work that is part of a tipped occupation, specifically; performing work that is tip producing or performing work that directly supports work that is tip producing for a limited amount of time.

The Final Rule also amends the provisions of the Executive Order 13658 regulations, which address the hourly minimum wage paid by contractors to workers performing work on or in connection with covered federal contracts consistent with the amendments to the dual jobs regulations.

Under the final rule, an employer can take a tip credit only when the worker is performing tip producing work or when:

  • A tipped employee performs work that directly supports tip producing work for less than 20 percent of the hours worked during the employee’s workweek. Therefore, an employer cannot take a tip credit for any of the time that exceeds 20 percent of the workweek. Time for which an employer does not take a tip credit is excluded in calculating the 20 percent tolerance.
  • A tipped employee performs directly supporting work for not more than  30 minutes. Therefore, an employer cannot take a tip credit for any of the time that exceeds 30 minutes.

The final rule becomes effective December 28, 2021.  See the Department of Labor website for more information.

 

YouTube News Alerts for Payroll 24/7

I want to let all my blog followers know that the Payroll Advisor now has a YouTube channel where I post my breaking news alerts.  These alerts are almost daily and help you keep abreast of the breaking news especially during this hectic time of year-end. If you are a subscriber to my news e-alert, Payroll 24/7 these updates will be already available to you first through that service.  Of course we only cover one news item per day in these news alerts so if you need all the news each day, you may consider subscribing to our news service.  I hope you find these news videos helpful and informative. If you do I hope you will hit the subscribe button to ensure you receive all future videos.

In the near future I will be adding other videos on various topics for subscribers to my YouTube channel.  These will include brief instructional videos on various payroll related topics.  So please check out our channel and hit the like and subscribe button.

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.

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.