Archive for October, 2011

Social Security Changes for 2012

Sunday, October 30th, 2011

Social SecurityThe Social Security Administration (SSA) announced changes for 2012 in a press release on 10/19/11.

The maximum amount of earnings subject to the Social Security tax is increasing from the 2011 amount of $106,800 to $110,100 beginning January 1, 2012.  Also, the 2011 Social Security tax holiday which reduced Social Security withholding to an effective rate of 4.2% ends December 31, 2011 and will go back to the original 6.2% beginning January 1, 2012.

Of the estimated 161 million workers who will pay Social Security taxes in 2012, about 10 million will pay higher taxes as a result of the increase in the taxable maximum.

Also, based on the increase in the Consumer Price Index from third quarter of 2008 through third quarter of 2011, Social Security and Supplemental Security Income (SSI) beneficiaries will receive a 3.6 percent cost of living adjustment (COLA) for 2012.  This is the first COLA since 2009.  This 3.6 percent increase in impact more than 60 million Americans who receive these benefits.

Information about Medicare changes for 2012, when announced, will be available at www.Medicare.gov.  For some beneficiaries, their Social Security increase may be partially or completely offset by increases in Medicare premiums.

View the SSA Press Release.

To see the effect of the various automatic adjustments, view the SSA fact sheet.

Article Submitted By:

PCS Client Services Team

Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney, CPA or HR Professional.

A Professionally Bundled Collaboration Brings Out the Best

Sunday, October 30th, 2011

TSC-PCS CollaborationSome of the most successful companies are those who do not venture beyond their core competency, but instead search for experts to handle specialized services that create a powerful collaboration. After all, just because a company offers a service, it does not necessarily mean they specialize in that particular area.

Tax Sheltered Compensation, Inc. (TSC) and Payroll Control Systems (PCS) have recently partnered to offer professionally bundled services to clients. TSC’s third-party administration of successful retirement plans and PCS’s quality payroll service provide more secure and simplified options for clients. The partnership means competency within compliance for both companies, and it is a win-win situation for their clients as well.

“There is a great value in partnering and not using false claims to say you can do it all,” said Gary Zurek, president of TSC.

The partnership is about convenience combined with trust. Together, the expertise and quality control of each company allows clients to have solid confidence in the services provided. More importantly, clients have confidence in the people who are providing the specialized services.

There are several advantages for employers to do business with a third-party administration firm that has integrated payroll services:

  • Simplifies tasks for the administrative personnel
  • Increases accuracy
  • Lowers the chances for error
  • Quickens turn around

This strategic collaboration strengthens both TSC and PCS by allowing them to offer clients complete, specialized services while staying within their own areas of expertise.

The right collaboration is a wonderful thing – especially when the result is effectively servicing clients.

Posted By:

Bob Willbanks
VP of Sales & Marketing
Payroll Control Systems
763.746.1934 Direct
bwillbanks@pcspayroll.com Email

Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney, CPA or HR Professional.

Direct Deposit Best Practices

Sunday, October 30th, 2011

Direct DepositMost employees and employers know what a great tool direct deposit is, but are you using direct deposit to its greatest advantage, and are you protecting yourself from any issues that may arise from paying employees via direct deposit?

The National Automated Clearing House Association (NACHA) estimates that an employer can save between $2.87 and $3.15 per payment by using direct deposit instead of live checks. For an employer with 25 employees and a bi-weekly payroll, this is around $2000 in savings annually.

The biggest reason that employers choose to offer direct deposit to their employees is that it cuts down considerably on the hassles of issuing paychecks to employees.  The funds are guaranteed to be in employees’ accounts on payday. Direct deposit virtually eliminates issues with unclaimed checks and escheatment, and even though a direct deposit paystub may be lost, the funds themselves are safely in the employee’s bank account.

So what do I need to know about direct deposit?

  1. It is important that you require your employees to complete a direct deposit authorization form.  The form authorizes you to deposit funds into the employees’ accounts, but more importantly authorizes you to reverse those funds out in the event of an overpayment or error. This is vital, especially in light of recent banking law changes.  You can get a copy of this form by clicking here.
  2. Make certain that you get a copy of a voided check from your employees when setting up direct deposits.  Do not accept deposit slips unless it is from a savings account.  If the deposit slip’s routing number begins with a 5, it is an internal routing number and should not be used as direct deposit can’t be processed with that routing number.  Ask your employee to bring in a voided check (or a copy of a blank check) or a specification sheet from their bank to confirm the correct numbers.
  3. Let the account information prenote on all new direct deposit setups whenever possible.

What if my employee doesn’t have a bank account yet I want to pay all my employees electronically?

  • Paycards are a great way to electronically pay an unbanked employee.  Our Paycard solution is no cost to the employer, and your employee’s can use the cards fee-free if they follow simple usage rules.  Click here for more details on the PCS Paycard Program.

Unfortunately an employee was incorrectly paid. What are the options to correct the payment?

Communication is key.  Let your employee know what is going to happen to their bank account.  Ensure they understand that they will see at least two transactions posting to their bank account; one that deposits the funds into the account and another that reverses the funds out of their account. If it is an underpayment situation, let them know how they will receive the additional funds.

  • If you have underpaid an employee, the best thing to do is let the original direct deposit process and create a manual check for the difference.
  • If an employee has been overpaid, call your Client Account Manager to initiate the direct deposit reversal process.   Click here to download the Direct Deposit Reversal Request form or contact your CAM for  help on deciding the best way to get the funds returned to your company, as well as get a corrected check issued to the employee.
  • There is a very small window of time for the employer to initiate a direct deposit reversal (typically 5 business days from paydate), so make the request with your CAM as soon as possible.
  • It is important to note that if an employee does not authorize the reversal, they may dispute the transaction, and they have up to 60 days to do that. If that does happen, you will have to get the funds back directly from the employee.

What do you do if employee comes to you and says that their bank account is closed or has been fraudulently accessed?

  • Ensure the employee has contacted their bank to not only inform them of the potential fraud, but that there is a direct deposit pending.
  • The best thing for the employer to do is wait.  The bank may return the direct deposit funds if the account was closed prior to the posting date of the direct deposit.  This typically takes two (2) business days from paydate.
  • If a fraud report has been made by the account holder(employee) the bank will return the funds to the company. The bank may also put the direct deposit in a new account if one has been opened by the employee. This is rare, but possible especially if it is at a credit union.

What if there are not enough funds to cover a direct deposit reversal?

  • Unfortunately, the request will be rejected by the employee’s bank if there are not sufficient funds to cover the entire amount.  They will not process a partial amount. You will have to get the funds directly from the employee.

Your CAM is always available to answer any questions that you have regarding direct deposit, paycards or banking questions in general.

Submitted By:

The PCS Client Services Team

Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney, CPA or HR Professional.

IRS Reminds Taxpayers that FUTA Surcharge has Expired

Sunday, October 30th, 2011

October 18, 2011FUTA Surcharge Expires

The IRS reminds employers that the Federal Unemployment Tax Act surcharge of 0.2% expired on June 30, 2011. This means that the FUTA rate for employers decreased from 6.2% to 6.0% starting on July 1, 2011.

The IRS is currently working to revise Form 940, Employer’s Annual Federal Unemployment Tax Return, to accommodate the two different rates and the form will be available before the Jan. 31, 2012, due date.

The surcharge was originally enacted in 1976, and Congress has extended it several times since. Unemployment benefits are not tied to the surcharge, so the expiration of the surcharge will not affect current or future unemployment benefits.

The IRS will post the Form 940 for the 2011 tax year, to the Forms and Publications section of IRS.gov and other relevant information, if any becomes available, about the FUTA surcharge on the Employment Taxes page.

Click here to preview the draft 940 form.

Provided By:

The PCS Tax Team

Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney, CPA or HR Professional.