Changes to Filing Deadlines

To fight tax fraud, many states have accelerated the filing deadline for employers to file Forms W-2, says APA Director of Publications Laura Lough, Esq. Eleven states, as well as the Commonwealth of Puerto Rico, require employers to file W-2 forms electronically or on magnetic media by January 31. Nebraska will have a filing deadline of February 1.

As you will recognize, this is a significant change.  More and more states are taking another action to fight tax fraud: delaying personal income tax (PIT) refunds to taxpayers. Sometimes employees file early hoping to get a refund faster. They may use information from a final paycheck to complete their PIT returns, rather than wait for a Form W-2 (due to employees January 31). Says Lough, “This is not a recommended practice as a final paycheck may not have all the necessary information that a Form W-2 will have”.

South Carolina and Utah have both indicated that they will delay personal income tax refunds to taxpayers in order to minimize fraud.  The delay gives the states the time to verify employer filings of W-2 Forms against taxpayer returns.  In some cases, the states will pair this action with an accelerated employer filing deadline for W-2 Forms, making that date January 31, instead of February 29 (this year’s deadline) for paper forms and March 31 for e-filing.

.Need more information?  Contact us or visit the American Payroll Association website for more information.

 

Vermont will require Paid Sick Leave

Effective January 1, 2017, Vermont will be added to the list of states requiring paid sick leave for employees.  The bill was signed by Governor Shumlin last week.  The list of states now requiring paid sick leave is:

  • California
  • Connecticut
  • The District of Columbia
  • Massachusetts
  • Oregon
  • Vermont

Vermont will use an “hour-per-hours worked” formula to allow for sick leave accrual.  There will be a maximum annual accrual amount in 2017 and 2018, which will increase in 2019.

 

myRA

If your employees don’t have access to a retirement savings account, the Federal Government has made a new option available.  It’s called myRA, and is available to anyone who has no access to another type of retirement savings, for example, a 401(k).  Think of it as a starter retirement account.  You know how important it is for all employees to save for retirement.  Participants can fund their myRA accounts through:

  • Payroll deduction. Participants can set up automatic direct deposit contributions to myRA through you, as the employer.
  • Checking or savings account. Participants can have monies deducted from a checking or savings account regularly, for example, a set amount each pay period.
  • Savers can also fund a myRA account directly by setting up one-time contributions from a checking or savings account.
  • Federal tax refund. At tax time, you may direct all or a portion of a federal tax refund to your myRA account.

What else do you need to know?

It’s easy:

As an employer, you don’t administer employee accounts, contribute to them, or match employee contributions. It only takes a few minutes for employees to sign up online.  You simply allow a payroll deduction for myRA.

It’s safe.

We know you care about your employees. myRA is a Roth IRA that is backed by the United States Treasury and carries no risk of losing money.

It’s affordable.

myRA is available at no cost to employers. It costs nothing to open an account and employees choose how much they want to save.  Employees also choose how the savings happen.

It’s portable.

Wherever your employees go, the account is available for them.  If they change jobs, the account remains with them.

If you want more information so that you can offer this to your employees, visit http://www.myRA.gov

 

NJ Legislation May Offer New Retirement Options

 

New legislation in New Jersey creates a “retirement savings plan marketplace” so that small employers can have a simple and inexpensive way to offer private savings plans to their employees [A.B. 4275, L. 2016]. Employer participation in the marketplace will be voluntary. At least one of the plan options will use payroll deductions to fund an employee’s retirement savings account.

The New Jersey retirement savings plan marketplace will be available to employers with 100 or fewer employees. The marketplace must offer at least two types of plans:

  • A retirement account funded through payroll deductions from an employee’s paycheck (the employer would not make contributions from its own funds), or
  • An individual retirement account (IRA)-type plan that provides for employer contributions. The marketplace will also offer myRA in addition to any other approved plans. myRA is a program developed by the U.S. Department of the Treasury to help more people save for retirement. Employers can set up payroll deductions for employees to fund their myRA accounts. (APA PayState Update)

If you are a small employer in New Jersey, contact your payroll provider or your benefits consultant to find out more.  Offering a retirement plan option, especially one that offers payroll deductions, makes you a “Good Guy” among employers.

We’ll be talking more about myRA options in our next post.  Watch this space for updates on the pending legislation.

IRS Issues Phishing Alert

Internal Revenue Service officials yesterday issued an alert to payroll professionals regarding a new phishing scam.  Professionals are being targeted with phony requests for payroll records, W-2 Forms and personal data.

Most importantly, the requests appear to be official, coming from an officer of the teams’ own companies.  Since the information requested usually contains Social Security numbers, extreme caution should be exercised at all times.  A legitimate request will come from identifiable sources, and the professional should always know how to respond.

Don’t ever give out Social Security numbers.  Even if you receive a legitimate request, use another identifier, or ensure that the numbers are masked (e.g. xxx-xx-2345).  Ensure that your company’s policy on information sharing is clear and protects both you and your employees.

Read more about the alert here.