|
|
|
| February, 2012 | ||
| State Treatment of Out-of State Wages: Study Update | ||
| ||
| In 2009, NPRC members formed a study group with several State Workforce Agency wage and tax reporting experts, as well as the National Association of State Workforce Agencies and the U.S. Department of Labor. The group examined how states are increasingly calculating taxable wage totals for employers within new electronic filing systems, and how these systems treat wages paid in other states, among other issues. The study group produced a paper that describes several state systems, and discusses alternatives. The study was updated in December 2011. Clearly, the trend is towards more state control of taxable wage totals, which has significant implications for employers and their service providers. | ||
| ||
| ||
| ||
| March, 2011 | ||
| Pennsylvania Municipal Income Tax | ||
| ||
| NPRC organized a group of software developers and APA members to meet with the Pennsylvania Department of Community and Economic Development and representatives of counties and tax collectors to express concerns and discuss how to facilitate transition year provisions of Act 32 (local income tax simplification). | ||
| ||
| ||
| ||
| February, 2011 | ||
| ||
| South Carolina Department of Employment and Workforce proposed due date change for wage and contribution reports for 2011 | ||
| ||
| In December 2010, the South Carolina Department of Employment and Workforce announced their intention to accelerate the deadline for employer wage and tax reports to the 15th of the quarter-end month. | ||
| ||
| While the change only affected South Carolina, we believe that most states would have quickly followed suit. As background, unemployment insurance claimants must demonstrate attachment to the workforce in the form of recent wages. The 2009 American Recovery and Reinvestment Act (ARRA) provided incentives to states to modernize their unemployment insurance programs by adopting an alternate base period (ABP), among other things. The ABP permits UI claimants to qualify for benefits based on recent earnings, such as wages paid in the most recent quarter. Recent wages are not available on automated state systems until after employers submit wage reports. As a result, states are exploring alternatives to accelerate availability of wage data, normally reported on the 30th or later. More than 40 states have now adopted an Alternate Base Period. | ||
| ||
| A reporting deadline of the 15th would dramatically reduce quarter-end processing time, adversely affecting clients and multiplying the volume of necessary. NPRC provided written input and appeared at the hearing, and the Department announced that it would not pursue the 15th due date. NPRC is working with the state and USDOL to consider alternatives, such as the UI SIDES system, and/or enhancements to electronic filing systems. | ||
| ||
| ||
| ||
| January, 2011 | ||
| ||
| NPRC Requests Clarification of the Department of Labor and Workforce Development’s Intended Scope in Implementing SB 1968 | ||
| ||
| New Jersey legislation (s.1968) was enacted to regulate the UI claims administration industry. The bill contained no references or specifics as to applicability to payroll service industry. Nevertheless, the New Jersey Labor Department notified all payroll (tax filing) service providers to register under the provisions of SB.1968. Although some terms in the statute are quite broad (e.g., “filing of any information”), it all deals with representation of employers. Even simple registration requirements create the appearance of state oversight, licensing and implied government backing. NPRC formally requested reconsideration of the agency’s position that it applies to payroll service providers. | ||
| ||
| ||
| ||
| September, 2010 | ||
| ||
| Arizona Enacts Limited Regulation of Payroll Service Providers | ||
| ||
| House Bill 2012 was enacted on March 18, 2010. It requires payroll service companies to register with the Department of Revenue, and comply with the following beginning May 31, 2011: | ||
|
||
 |
Have written authorization from clients to handle AZ income tax withholding. | |
|
Keep client funds separate from the payroll service company’s funds. | |
|
Make all withholding tax payments and filings timely and electronically. | |
|
Electronically provide a client list to DOR, updated monthly. | |
|
Provide DOR with a copy of any client contract on request. | |
|
Comply with all requirements provided by law and any rules subsequently adopted by DOR. | |
|
The law imposes a penalty of $25 per payment or return for non-electronic filing beginning June 1, 2011. | |
|
It permits confidential tax information to be disclosed in limited circumstances involving penalties assessed against the payroll service company if the method of payment or filing is at issue. | |
| ||
| The law appears to apply to payroll service companies with even a single client. | ||
| ||
| ||
| ||
| Military Spouses Residency Relief Act | ||
| ||
| The Military Spouses Residency Relief Act was signed into law on November 11th but is retroactive to January 2009. It prohibits states from taxing income earned by military spouses who move into a state to be with the service member. In view of the potential impact to year-end if states announce diverse W-2 reporting requirements, NPRC joined with the APA and the Federation of Tax Administrators to recommend a consistent set of state measures, including acceptance of W-2s showing 2009 wages and withholding despite the retroactive effective date. | ||
| ||
| ||
| ||
| August, 2009 | ||
| ||
| New Taxpayer Information Validation Program Implementation Guide | ||
| ||
| A key element and best practice in the newest electronic filing systems is a means to improve the accuracy of returns and payments. Payroll service firms electronically send critical taxpayer entity information such as Employer Identification numbers, business names, tax rates, assigned filing schedules, and other variables that affect the processing of tax returns. | ||
| ||
| Such programs serve to verify or correct taxpayer information before a tax return or payment becomes due, minimizing errors in tax return and payment processing. NPRC has prepared an implementation guide to explain how these programs work and to establish standard data formats that can be used by all states and service providers. | ||
| ||
| ||
| ||
| July, 2009 | ||
| ||
| NPRC Recommendations for State Employer Withholding Electronic Filing Systems | ||
| ||
| NPRC has developed separate design recommendations for state electronic filing systems for withholding taxes. Included are suggestions for technical standards, program features, pre-filing taxpayer information verification programs, enrollment requirements, edits appropriate to employment taxes and more. | ||
| ||
| ||
| ||
| Revised March, 2009 | ||
| ||
| NPRC Presents Comprehensive Recommendations for State Electronic Filing Systems | ||
| ||
| NPRC members presented comprehensive design recommendations for state electronic filing systems to state tax officials at the annual Federation of Tax Administrators Technology conference, addressing technical standards and general program features, such as pre-filing applications designed to improve data accuracy. There is a separate presentation, and detailed recommendations paper. | ||
| ||
| ||
| ||
| September, 2006 | ||
| ||
| How to Verify State Witholding Tax Payments | ||
| ||
| Payroll managers should, as a best practice to protect company assets, verify tax payments made on the company's behalf by any third party. The IRS reminds us that: | ||
| ||
| “the employer is ultimately responsible for payment of federal tax liabilities. Even though (a) third party is making the deposits, the employer is the responsible party. Employers should… use EFTPS (Electronic Federal Tax Payment System), to confirm payments made on their behalf… electronically 24 hours a day, 7 days a week through the Internet, or by phone. Enroll online at http://www.eftps.gov, or call 800-555-4477 for an enrollment form.” – SSA/IRS Reporter, Spring 2006 | ||
| ||
| State tax authorities generally offer similar means to verify tax payments. Go to: How to Verify State Tax Payments See also: How to Verify State Unemployment Tax Payments |
||
| ||
| ||
| ||
| January, 2006 | ||
| ||
| Maine legislation to regulate payroll service organizations | ||
| ||
|
||
| Maine has led the states in enacting legislation to regulate payroll service organizations to improve the safety of client funds. This is an issue not easily addressed, and an area in which taking action, however well-intentioned, may actually increase the risks to businesses. For details, view the NPRC testimony over the past three years: | ||
|
March 19, 2004, concerning LD 1843 – An Act to Require Surety Bonding by Payroll Processing Companies | |
|
||
|
February 1, 2005, concerning LD 58 – An Act to Support Payroll Processors, and LD 208 – An Act to Lower the Surety Bond Requirement for Payroll Processors | |
|
||
|
March 22, 2005, concerning LD 633 – An Act to Relieve Small Payroll Companies From Excessive Regulation | |
|
||
|
January 25, 2006, concerning LD 1878 – An Act to Protect Small Payroll Processors | |
| ||
Last updated February 12, 2012