The Missouri legislature passed HB 1194, a bill that overturns the St. Louis minimum wage increase of $10 effective May 5, 2017, and $11 effective January 1, 2018. The law also blocks Kansas City from increasing its minimum wage. The governor is expected to sign off on the measure.
According to the bill language, the bill preempts and nullifies all political subdivision ordinances, rules, and regulations currently in effect or later enacted relating to the establishment or enforcement of a minimum or living wage or the provision of employment benefits (i.e., paid sick leave) that exceed state laws, rules, or regulations.
An emergency clause in the bill that would have made the law effective immediately was defeated prior to passage. As a result, the bill would be effective August 28, 2017, if enacted.
The phishing scam that affected payroll last year has made a comeback. You’ll remember that last year we warned of a scam targeting us, those who have access to sensitive information. An email was sent, supposedly from the CEO, asking for copies of W-2 Forms for the C-suite executives, or for all the employees.
Read more here. Our thanks to Debera Salam for the update.
A federal judge in Texas has issued a nationwide order preventing the U.S. Department of Labor from increasing the “white collar” exemption salary minimum to $913 per week December 1. This order remains in effect until the court case filed by multiple states and jurisdictions goes to trial.
In New Jersey, the Governor has eliminated the earlier action on Pennsylvania residents. You’ll remember that we previously reported on the cancellation of one portion of the reciprocal agreement between the states.
The Governor’s action resumes the current practice of allowing cross-state withholding. Pennsylvania residents working in New Jersey can continue to have Pennsylvania income tax withheld from their pay, while New Jersey residents working in Pennsylvania can continue to have New Jersey tax withheld from their Pennsylvania income.
The reason for the about face? New Jersey was able to negotiate a better pharmacy plan for their health care plans, thereby saving enough money to allow the reciprocity to continue.
In Indiana, HEA 1485-2015 combined county adjusted gross income tax, county option income tax, and county economic development income taxes into one combined local income tax. The new local income tax goes into effect January 1, 2017.
Effective January 1, 2017, the Indiana Department of Revenue will publish one local income tax rate in Departmental Notice #1 and in its return instructions for tax years starting in 2017. That rate will be applicable to both resident and nonresident taxpayers. Any changes to local income tax rates for withholding will be published by the department in Departmental Notice #1, which is published on the department’s website twice a year and is effective January 1 and October 1 each year. Other than listing one rate as opposed to two, no changes in the publication dates or location of publication on the department’s website will occur.
Do any of your employees claim “Exempt” on their W-4 Forms? If so, remember that the form expires annually. If your employee wants to continue to claim “Exempt” from withholding in 2017, he or she will need to fill out a new W-4 Form for 2017. Your system should allow you to create a report listing all the employees who are set up in payroll as “exempt from withholding”. Make sure to send out a reminder memo to all employees regarding withholding – both those claiming exempt and those who don’t. January is a good time to fill out new forms. Based on changes in their tax situations in 2016, some employees may want to make changes to their withholding.
California EITC (Earned Income Tax Credit)
The state of California requires that a separate notice be sent to employees advising them to file for the Federal Earned Income Tax Credit if they are eligible. Effective with this year end, California employers must also advise their employees that they may be eligible for the California Earned Income Tax Credit. This credit is offered in addition to the Federal Earned Income Tax Credit. Form FTB-3514 plus a California Income Tax return will assist any eligible taxpayer. See more about this credit here.
Ohio FUA Repayment
The state of Ohio has repaid its FUA (Federal Unemployment Account) loan balance. These loans are available to states that have depleted their unemployment account balances. As long as Ohio does not borrow any more money from the fund before the deadline of November 10, 2016, Ohio can avoid being a FUTA credit reduction state for the 2016 reporting year. This would mean that Ohio employers would be able to take the full FUTA credit of 5.4% as long as all of their state unemployment returns were filed and paid timely during 2016.
The Department of Justice announced today the arrest of 61 people in the U.S and in India for the perpetration of an unusually successful scam. The calls to individuals threatened them with lawsuits unless the person paid up.
The money, in most cases, is lost. The overseas conspirators, including call centers in India, used methods of transferring cash that made it generally undetectable.
The operator would threaten potential victims, the government alleges, and if the operator found someone who believed the call was real, co-conspirators would work to extract money from the victim.
“One 85-year-old California woman was threatened over nonexistent tax violations,” NPR’s Carrie Johnson reports. “Prosecutors say she turned over $12,000 to the scammers.”
The IRS will not call a taxpayer; if contact is needed, they will send a letter via USPS postal mail. See more information on the case here.
If you’re an employer, you’ll need to be looking out for changes, new rules, and any other compliance measures for year-end 2016. We’ll be supplying a round-up of these in our blog posts over the next few weeks.
Social Security Wage Base for 2017
The Social Security Administration has released the wage base for 2017. Please see the fact sheet here.
The wage base will be $127,200, an increase of $8,700 from the 2016 base of $118,500. The total amount withheld from employees will be $7,886.40, an increase of $539.40 from $7,347 in 2016. As in previous years, all Social Security deductions are matched by you, as the employer. This year again, there is no cap on Medicare withholding for employees or employers.
W-2 Filing Deadline – are you prepared?
REMINDER: The due date for filing 2016 W-2 Forms is January 31, 2017. We discussed earlier this year the fact that the Federal government and many state governments have accelerated the W-2 filing deadlines in an attempt to stem tax return fraud. Here’s a link to a useful fact sheet that will put this information at your fingertips.
Make sure your calendar is updated. See you soon.