Archive for the ‘Government News’ Category

MN Revenue Delays Requirement of Electronic Wage Levy Payments & Disclosures

Friday, January 3rd, 2014

Here is an update from the Minnesota Department of Revenue:

“We are delaying, until further notice, the requirement that all employers send state wage levy disclosures and payments electronically. (The requirement had been scheduled to begin on Jan. 1, 2014.)

For existing wage levies, please continue to submit disclosures and payments as you have been doing. We will post updated information as it is available. To receive updates, check this page frequently, or sign up for our email updates.

If you have questions about wage levies, please contact our Collection Division at 651-556-3003 or mdor.collection@state.mn.us.”

More information may be found here:  http://www.revenue.state.mn.us/eservices/Pages/eServices_info.aspx

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.

Tax Updates for 2014

Friday, December 6th, 2013

2014-Tax-Changes

Social Security:

The Social Security Rate for employees and employers remains 6.2% in 2014 but the taxable wage base has increased to $117,000 (up from $113,700 in 2013).

Medicare:

The Medicare employee and employer rate remains 1.45% with no maximum taxable earnings. The Additional Medicare Tax that began on 1/1/13 also remains the same with a 0.9% Additional Medicare Tax withheld on individual’s wages and compensation paid in excess of $200,000 in a calendar year. Our payroll software is setup to withhold this Additional Medicare Tax.

Employers are responsible for withholding the 0.9% Additional Medicare Tax on an individual’s wages and compensation paid in excess of $200,000 in a calendar year and are required to begin this in the pay period in which wages and compensation exceeds $200,000 to an employee. An employer has this withholding obligation even though an employee may not be liable for the Additional Medicare Tax because, for example, the employee’s wages or other compensation together with that of his or her spouse (when filing a joint return) does not exceed the $250,000 liability threshold. Any overages in withheld Additional Medicare Tax will be credited against the total tax liability shown on the individual’s income tax return (Form 1040). There is no employer match for the Additional Medicare Tax.

For more information, see the IRS questions and answers.

Standard Mileage Rate for 2014:

The standard mileage rate for 2014 was decreased to 0.560 cents per mile (down from 0.565 in 2013). This is an optional standard rate which is widely used by employers to calculate mileage reimbursement for employees who use their personal vehicles for company business.

FUTA Credit Reduction Impacts 14 States:

Employers in 14 states will owe additional Federal Unemployment Tax (FUTA) with the 2013 quarter 4 returns (due in January 2014). For additional information, view our full article here: http://truthinpayroll.com/2013/12/futa-credit-reduction-impacts-14-states/.

IRS Changes “Use-It-Or-Lose-It Rule” for Flexible Spending Accounts:

The U.S. Department of the Treasury and the IRS issued a notice modifying the longstanding “use-or-lose” rule for health flexible spending arrangements (FSAs). An employer that sponsors a health FSA may now choose to allow its employees to carry over unused amounts of up to $500 to use to reimburse qualified medical expenses incurred during the following year or allow them a grace period of up to two and a half months (though employers are not required to allow either). A health FSA cannot, however, have both a carryover and a grace period. Our full article can be found here: http://truthinpayroll.com/2013/12/use-or-lose-rule-modified-for-health-flexible-spending-arrangements/

Retirement Plans COLA:

COLA increases for dollar limitations on retirement plan contributions have been released by the IRS for 2014. The max deferral amount for 401k, 403b, 408k and 457b plans remain at $17,500 with the catch-up contribution amount for those over 50 years of age remaining at $5,500. Simple plan limits also remain at $12,000 with the catch-up contribution limit remaining at $2,500 for any person over 50 years old. More information from the IRS on the new limits can be found here: http://www.irs.gov/Retirement-Plans/COLA-Increases-for-Dollar-Limitations-on-Benefits-and-Contributions.

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.

“Use-Or-Lose” Rule Modified for Health Flexible Spending Arrangements

Thursday, December 5th, 2013

The U.S. Department of the Treasury and the IRS issued a notice modifying the longstanding “use-or-lose” rule for health flexible spending arrangements (FSAs).  For the first time, at the plan sponsor’s option, employees participating in health FSAs will be allowed to carry over – instead of forfeiting – up to $500 of unused amounts remaining at year-end.  The modification notice can be found here:   http://www.irs.gov/pub/irs-drop/n-13-71.pdf.

What’s a health FSA?

Health FSAs are benefit plans that employers can sponsor to allow their employees to be reimbursed on a tax-favored basis for certain medical expenses that are not covered by the employer’s major medical plan.  An estimated 14 million families participate in health FSAs.  Health FSAs may be offered in conjunction with other employer-provided benefits as part of a cafeteria plan.  They are commonly funded by employees through voluntary salary reduction contributions, and employers may also contribute.  Contributions to an FSA are not includible in the employee’s income, and reimbursements from an FSA that are used to pay qualified medical expenses are not taxed.

How do health FSAs work?

Generally, employees decide before the beginning of the plan year how much money they want to contribute to the FSA.  Throughout the year, they can draw from this account for qualified medical expenses that are not covered by their employer’s main health plan.  This can include copays, deductibles, and various medical services and products – from dental and vision care to eyeglasses and hearing aids.  For the past 30 years, health FSAs have been subject to a “use-or-lose” rule, meaning that any funds left unused at the end of the year are forfeited.

What’s changed and how does this help consumers?

Today’s notice makes health FSAs more consumer friendly by relaxing the use-or-lose rule.  This will enable employers, for the first time, to permit employees to use up to $500 of unused health FSA amounts in the next year, instead of forfeiting the unused amounts.  Notably, most forfeitures are less than $500.  Individuals can now participate in a health FSA without the risk of losing all of their unused contributions.  This also cuts back on wasteful year-end FSA healthcare spending by limiting the risk of forfeiture, and in turn, reducing the incentive to spend down as year-end approaches in order to avoid losing unused funds.  Some plan sponsors may be eligible to take advantage of the option to adopt a carryover provision as early as plan year 2013.

How do I participate?

An employer that sponsors a health FSA can choose to allow its employees to carry over unused amounts of up to $500 to use to reimburse qualified medical expenses incurred during the following year.  Plan sponsors now have the choice of either allowing employees a carryover of up to $500 or allowing them a grace period of up to two and a half months (though employers are not required to allow either).  A health FSA cannot, however, have both a carryover and a grace period.

*The annual contribution limit remains $2,500.

Released 10/31/13:   

http://www.treasury.gov/press-center/press-releases/Documents/103113FSA%20Fact%20Sheet.pdf

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.

2013 FUTA Credit Reduction Impacts 14 States

Tuesday, December 3rd, 2013

FUTA Credit Reduction

This article will briefly discuss FUTA Credit reduction and how this may affect your business.

Federal Unemployment insurance tax is a flat rate of 6.0% on the first $7000 in employee wages.  However, the federal government provides a 5.4% tax credit to companies that pay their state unemployment taxes on time.  This results in an effective federal unemployment tax rate of 0.6% on the first $7000 in wages (or $42 per employee, per year).

According to federal law, states with a high rate of unemployment and difficulty meeting their benefit obligations can borrow money from the FUTA account. If a state has an outstanding loan on January 1 for two consecutive years, and does not repay the full amount by November 10 of the second year, the FUTA credit rate for employers in that state will be reduced until the loan is repaid.

A state with an outstanding loan can avoid a credit reduction by repaying the loan by November 10th of the year the reduction is scheduled to take effect.  If the loan is not repaid by that date, a credit reduction of 0.3% goes into effect, with employers in that state having their maximum credit reduced to 5.1% (5.4% – 0.3%) and their effective FUTA tax rate increased to 0.9% (0.6% + 0.3%) or $63 per employee in the first year of reduction.  Each year a loan remains unpaid, the credit reduction increases by 0.3%, although there are limits for states that have made efforts to keep their balances in check.

How will this affect your company?

If you were required to pay state unemployment in any of the impacted states during 2013, you should expect to pay additional Federal Unemployment Tax on the wages paid in these states when the 940 return is filed for 2013 (due January 31, 2014).

The credit reduction increase of 0.3% is an additional $21 per employee, 0.6% is an additional $42 per employee, 0.9% is an additional $63 per employee and 1.2% is an additional $84 per employee.  The FUTA liability will appear on the Schedule A form, which is filed with the 940 return in the 4th quarter packet.

States

Reduction Rate

Additional Amt Per Employee

 Arkansas

.009

$63

 California

.009

$63

 Connecticut

.009

$63

 Delaware

.006

$42

 Georgia

.009

$63

 Indiana

.012

$84

 Kentucky

.009

$63

 Missouri

.009

$63

 New York

.009

$63

 North Carolina

.009

$63

 Ohio

.009

$63

 Rhode Island

.009

$63

 Virgin Islands

.012

$84

 Wisconsin

.009

$63

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.

W-2 Reporting of Employer-Provided Health Coverage

Wednesday, October 30th, 2013

The Affordable Care Act requires many employers to report the cost of coverage under an employer-sponsored group health plan on employees’ W-2s. If you need to have a new earning code setup for this, please contact your Client Account Manager before processing your final 2013 check date.

All employers that provide “applicable employer-sponsored coverage” under a group health plan are subject to the reporting requirement, except as provided in the transition relief described below. This includes federal, state and local government entities (except with respect to plans maintained primarily for members of the military and their families), churches and other religious organizations, and employers that are not subject to the COBRA continuation coverage requirements, but does not include federally recognized Indian tribal governments or, until further guidance, any tribally chartered corporation wholly owned by a federally recognized Indian tribal government. Those that were not required at this time may choose to voluntarily comply this year and could be required in future years but the IRS will give at least six months of advance notice of any changes to the transition relief.

In general, the amount reported should include both the portion paid by the employer and the portion paid by the employee whether or not it was pre-tax. In the case of a health FSA, the amount reported should not include the amount of any salary reduction contributions.

The cost of these health care benefits will be reported in Box 12 of the Form W-2, with Code DD. It is listed for informational purposes only, and is not taxable.

The transition relief applies to the following:

  • Employers who filed fewer than 250 Forms W-2 for the previous calendar year (employers who filed fewer than 250 W-2s for 2012 tax year, determined without application of any entity aggregation rules for related employers) will not be required to report the cost of coverage on the 2013 W-2s.
  • Multi-employer plans.
  • Health Reimbursement Arrangements.
  • Dental and vision plans that are not integrated into another group health plan or that give participants the choice of declining the coverage or electing it and paying an additional premium.
  • Self-insured plans of employers not subject to COBRA continuation coverage or similar requirements.
  • Employee assistance programs, on-site medical clinics, or wellness programs for which the employer does not charge a premium under COBRA continuation coverage or similar requirements; and
  • Employers furnishing W-2s to employees who terminate before the end of a calendar year and request their W-2 before the end of that year.

Employers are not required to create a W-2 for the sole purpose of reporting health coverage.

For more detailed information on this topic and other Affordable Care Act Tax Provisions for Employers, visit: http://www.irs.gov/uac/Form-W-2-Reporting-of-Employer-Sponsored-Health-Coverage

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.

 

Are You On Top of the Affordable Care Act Requirements?

Wednesday, October 30th, 2013

Employee AbsenteeismImplementation of the Affordable Care Act occurs in stages, with many of the reforms and requirements taking effect in 2013 and 2014.  There is a lot of information out there but it can be difficult to filter through it all.  Here are some great resources to help you make sure you are on top of the requirements that affect your business specifically.

Employers with fewer than 25 employees:

http://www.sba.gov/content/employers-with-fewer-25-employees

Employers with 50 or fewer employees:

https://www.healthcare.gov/what-do-small-businesses-need-to-know/

Employers with 50 or more employees:

http://www.sba.gov/content/employers-with-50-or-more-employees

What if I am self employed?

http://www.sba.gov/content/self-employed

Glossary of key Health Care Reform terms:

https://www.healthcare.gov/glossary/

 

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.

FUTA Credit Reduction – Anticipated States and Rates

Wednesday, October 30th, 2013

There are 14 states and one territory (Virgin Islands) that are anticipated to have FUTA credit reductions imposed for 2013 unemployment taxes.  “Credit reduction” states are states that did not repay the funds borrowed from the federal government to pay unemployment benefits and as a result have additional federal unemployment tax due in January with their 2013 quarter 4 returns.

The 14 states projected for 2013 are: Arkansas, California, Connecticut, Delaware, Georgia, Indiana, Kentucky, Missouri, Nevada, New York, North Carolina, Ohio, Rhode Island and Wisconsin. This is based on a projection from the Department of Labor.  CBIZ Payroll will send additional notifications after the official list is released at the end of November.

These projected credit reductions would increase the 2013 Federal Unemployment rate by 0.6% for Delaware (an additional $42 per employee), 1.2% for Indiana (an additional $84 per employee), 1.8% for the Virgin Islands (an additional $126 per employee) and 0.9% for the remaining states (an additional $63 per employee).

Employers in credit reduction states would need to calculate the credit reduction as an adjustment to their FUTA tax on their 2013 Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return.  CBIZ Payroll clients with the Full Tax Service will have debits in January to collect any additional FUTA tax needed for the quarter 4 deposits.

States Reduction Rate
Arkansas .009
California .009
Connecticut .009
Delaware .006
Georgia .009
Indiana .012
Kentucky .009
Missouri .009
Nevada .009
New York .009
North Carolina .009
Ohio .009
Rhode Island .009
Virgin Islands .018
Wisconsin .009

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.

Federal Law Alert – Health Care Reform FAQ

Friday, May 10th, 2013

Please take note of the following Federal Law Alert, courtesy of HR Support Center:

Question: We have over 50 employees. Is it true that we may face health care reform penalties even if we do offer health insurance coverage in 2014?

Answer: Yes, an organization with 50 or more employees may still face Health Care Reform penalties from the Federal Government if it does not offer “minimum essential coverage” at an “affordable rate”.

So what is “minimum essential coverage”? And what is an “affordable rate”? “Minimum essential coverage” refers exclusively to the health insurance plan design, not how much the employer contributes to the plan. In order to offer minimum essential coverage under the federal law, the health insurance carrier must pay for at least 60% of treatment costs, commonly referred to as a health plan with a 60% actuarial minimum value. In the coming months, you will probably hear this level of plan referred to as a “bronze level” plan. On the other hand, “affordable” coverage has everything to do with how much the employer contributes to the plan. It is a common misconception that a large company is required to contribute a specific percentage to each employee’s health insurance plan (such as 50%, 60% or 75%). Rather, the federal law requires that the organization contributes enough so that the employee’s portion of the premium for employee-only health insurance coverage for the “bronze level or richer” plan is no more 9.5% of the employee’s total household income. Since employers generally do not know an employee’s total household income, there is a safe harbor in place for 2014 stating that employees have access to “affordable coverage” as long as the employee’s portion of the premium for single coverage for the “bronze level or richer” plan is equal to or less than 9.5% of the employee’s reported W-2 wages.

If you have questions regarding penalty amounts and calculations, please reach out to your Human Resources Professional, Accounting Professional or Health Insurance Broker.

This information is provided courtesy of your HR Pros.  If you have questions about how to access your HR Support Center account, please contact your Client Account Manager.

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.

Federal Law Alert – Form I-9 Change

Friday, May 10th, 2013

Please take note of the following Federal Law Alert, courtesy of HR Support Center:

The U.S. Citizenship and Immigration Services (USCIS) published a revised Employment Eligibility Verification Form I-9 for use.  All employers are required to complete a Form I-9 for each employee hired in the United States.  Employers should not complete a new Form I-9 for current employees if a properly completed Form I-9 is already on file.

Effective 03/07/13:  Employers should begin using the newly revised Form I-9 (Rev. 03/08/13) for all new hires and re-verifications.  Employers may continue to use previously accepted revisions (Rev.02/02/09) and (Rev. 08/07/09) until May 7, 2013.  As of May 7, 2013, employers must only use Form I-9 (Rev. 03/08/13).  The Form I-9 Instructions and Form I-9 document are available in the HR Support Center, under the Essentials tab, or in the forms section on our website.

This information is provided courtesy of your HR Pros.  If you have questions about how to access your HR Support Center account, please contact your Client Account Manager.

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.

Women’s Preventive Services Update Impacting Religious Organizations

Wednesday, February 27th, 2013

ACA - Womens Preventative Services UpdateFebruary 6, 2013

The ACA governing agencies are proposing a way to provide the full panoply of women’s health services without unduly burdening religiously affiliated organizations who object to providing contraceptive coverage, as imposed by the preventive services mandate. On February 6, 2013, the Agencies released proposed regulations and a Fact Sheet addressing these issues.

As background, the ACA requires non-grandfathered plans to cover women’s preventive health services without any cost-sharing (see Preventive Care Coverage Expanded to include Women’s Health Services, 8/3/2011). For plan years beginning on or after August 1, 2012 (January 1, 2013 for calendar year plans), plans are required to include coverage for these women’s health services, including contraceptive services.

Group health plans sponsored by certain religious employers are exempt from the requirement to cover contraceptive services. This exemption applies very narrowly to churches, temples and similar houses of worship. The regulations propose a clarification to the definition, as described below. The clarification is intended to provide protection to houses of worship that engage in such activities such as food pantries or other outreach programs.

The definition of a religious employer also left organizations with religious affiliations, such as hospitals, colleges and universities, private primary and secondary schools, and social service organizations who cannot meet the exception exposed to providing the women’s preventive services mandate. Temporary relief from this requirement was issued last year (see Preventive Health Services for Women: Regulations Final – Limited Exception for Certain Church Plans, 2/13/12). The Agencies are now issuing a proposal to offer a more long term solution.

Religious Employer Re-defined.
The proposed regulations re-define religious employer to primarily include churches, other houses of worship, and their affiliated organizations, as defined in IRC Section 6033(a)(3)(A)(i) and (iii).

Accommodation for Religious Organizations
The proposed regulations provide a waiver from the requirement to provide contraceptive services for religious organizations that don’t qualify for the full exemption. To obtain the waiver, the religious organization must:

  1. Oppose providing coverage for some or all of any contraceptive services required by the women’s services mandate on account of religious objections;
  2. Be organized and operate as a nonprofit entity;
  3. Hold itself out as a religious organization; and
  4. Maintain a self-certification form (see below), for each plan year to which the accommodation is to apply.

Organizations that meet this criteria would not be required to endorse, pay for, or otherwise facilitate coverage of the objectionable benefit; but such benefits would continue to be made available to women through a separate individual policy.

Self-Certification Form
HHS provides the form and instructions for obtaining the self-certification (CMS-10459 – Coverage of Certain Preventive Services Under the Affordable Care Act). The self-certification must be executed by an authorized individual of the organization, and specify the types of contraceptive services that the organization does not wish to administer or fund.

Insurer Obligations
An insurer receiving a copy of the self-certification form would be required to provide coverage for any contraceptive services identified in the form through a separate policy for each plan participant and beneficiary. The insurer is then obligated to include a separate written notice to participants of the availability of the contraceptive coverage in its application and enrollment materials. Below is the model language that can be used in the notice:

“The organization that establishes and maintains, or arranges, your health coverage has certified that your group health plan qualifies for an accommodation with respect to the federal requirement to cover all Food and Drug Administration-approved contraceptive services for women, as prescribed by a health care provider, without cost sharing. This means that your health coverage will not cover the following contraceptive services: [contraceptive services specified in self-certification]. Instead, these contraceptive services will be covered through a separate individual health insurance policy, which is not administered or funded by, or connected in any way to, your health coverage. You and any covered dependents will be enrolled in this separate individual health insurance policy at no additional cost to you. If you have any questions about this notice, contact [contact information for health insurance issuer].”

If plan is self-funded, the regulations propose that the third party administrator (TPA) would facilitate this process. The insurer providing the coverage would receive an additional adjustment in the user fees charged by the federal exchange in an amount that would offset the TPA’s charge for performing the service. The insurer would then pass the amount on to the TPA as a condition for receiving a user fee adjustment.

Student health insurance coverage sponsored by higher education institutions
Student health insurance coverage arranged by a group health plan sponsored by an exempt religious organization’s higher education institution would be handled in the same manner as above; except the model notice would change the reference “plan participants and beneficiaries” to “student enrollees and their covered dependents”.

Comment period.
The Agencies are seeking comments on these proposals through April 8, 2013.

Until these rules are finalized, organizations with a religious affiliation can continue to follow the relief described in this Health Reform Bulletin, Preventive Health Services for Women: Regulations Final – Limited Exception for Certain Church Plans.

Conclusion
While this proposal may provide relief to religiously affiliated organizations, it does not provide any relief to private sector entities with moral or religious objections to providing contraceptive services. Numerous lawsuits have been filed on this topic and are winding their way through the court system. It is certainly possible that this issue will reach the Supreme Court at some point.

About the Author: Karen R. McLeese is Vice President of Employee Benefit Regulatory Affairs for CBIZ Benefits & Insurance Services, Inc., a division of CBIZ, Inc. She serves as in-house counsel, with particular emphasis on monitoring and interpreting state and federal employee benefits law. Ms. McLeese is based in the CBIZ Leawood, Kansas office.

The information contained herein is not intended to be legal, accounting, or other professional advice, nor are these comments directed to specific situations. The information contained herein is provided as general guidance and may be affected by changes in law or regulation. The information contained herein is not intended to replace or substitute for accounting or other professional advice. Attorneys or tax advisors must be consulted for assistance in specific situations. This information is provided as-is, with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein. As required by U.S. Treasury rules, we inform you that, unless expressly stated otherwise, any U.S. federal tax advice contained herein is not intended or written to be used, and cannot be used, by any person for the purpose of avoiding any penalties that may be imposed by the Internal Revenue Service.