2011 Year End Update

2011 Year End Update

 

Take the stress out of December and preparing for Year End by using Tricom’s Year End Bulletin to stay on top of legislative changes that are important to the staffing industry.

We’ve collected all the relevant, timely and necessary information you need to ensure your staffing company is staying up-to-date with changes that directly impact your business.


 
To download the Update Insert, click HERE.
To download the 2012 News, click HERE.
 

FEDERAL UPDATES: SOCIAL SECURITY WAGE LIMIT INCREASE

The Social Security Administration has increased the taxable wage base for 2012 from $106,800 to $110,100. The Medicare taxable wage base was eliminated in 1994; therefore all earned income will be subject to Medicare tax. The employee tax rate for Social Security is currently at 4.2% (employer rate is 6.2%) and Medicare (both employee and employer) remains unchanged at 1.45%. The Obama administration has proposed keeping the employee social security rate at 4.2% for 2012, but this has not been approved by Congress. If nothing is decided, the employee rate will move back to 6.2% in 2012.
 

ADDITIONAL FEDERAL CHANGES

  • 401K Limit has been increased for 2012 to $17,000 from $16,500. The catch-up contribution for those employees over 50 years of age has not changed from $5,500.
  • Tax-free parking benefits to employees increased to $240 from $230 per month.
 

FEDERAL UNEMPLOYMENT LOAN STATUS

As of 11/4/2011, 30 States have received loans from the Federal Government in order to pay unemployment benefits within their states. The total outstanding is over 38 billion dollars. If these loan payments have not been made, these states risk losing a portion of the 5.4% unemployment credit. The following 18 states and the Virgin Islands will be subject to a .03% FUTA credit reduction for 2011: Arkansas, California, Connecticut, Florida, Georgia, Illinois, Kentucky, Minnesota, Missouri, Nevada, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, Virginia and Wisconsin.
 
Indiana will have a .06% credit reduction because this is their second year, and Michigan will have a .9% credit reduction because it is their third year.
 
If you have employees working in any of these states, Tricom will be calculating your potential charge through November and will begin working with you to ensure these funds are available if/ when they are due on January 31, 2012. There are a variety of plans proposed to Congress in regard to these loans. The official determination of the credit reduction states for 2011 will be made by the IRS with the release of federal form 940 and Schedule A. Please look for further information on www.Tricom.com under Press & News/ Legislative Updates. For the most current and up-to-date information, follow Tricom on Facebook, LinkedIn and Twitter. If you have any questions on the FUTA tax credits, please contact one of our Accounting professionals.
 

STATE: NEW TAX RATES FOR 2012

As in past years, there are several new tax rates going into affect on January 1, 2012. The following is a list of states that have made us aware of changes in their rates: California, Kentucky, Connecticut (Changed on 8/1/2011), Delaware and Maine.
 

MINIMUM WAGE INCREASES FOR 2012

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

VALID SOCIAL SECURITY NUMBERS

The IRS has changed the amount that it will charge as penalty for incorrect SSNs. A $100 penalty for each Form W-2 where the employee’s name and social security number do not match the Social Security Administration database can now be charged. Employers can call SSA’s nationwide toll-free number for employers (800-772-6270), weekdays from 7:00 am to 7:00 pm ET to verify up to Five employee names and social security numbers. The SSA also has a website where you can verify up to 10 SSNs at one time. The website is www.ssa.gov/employer/ssnv.htm. If you need assistance with this process, please contact Mike Auchter (ext. 213) or Erica LeTourneau (ext. 239). However, the IRS has stated that as long as the employer has a completed W-4 with the invalid social security number, signed by the employee, they will abate this penalty. Also keep in mind that our Pay Card vendor will be unable to set up pay cards for employees with invalid Social Security numbers.
 

CALIFORNIA AND NEW JERSEY DISABILITY RATE CHANGES

For 2012, California has increased the disability wage base from $93,316 in 2011 to $95,585. The employee contribution rate will decrease to 1%  (currently 1.2%). New Jersey has not changed the employee tax rate for 2012.  The wage base will increase to $30,300 from $29,600.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
*For most employers the wage base will be $19,600. For employers paying the highest UI tax rate of 9.79%,the wage base will be $21,100. 17 States Increased their Wage Limit for 2012. 1 State Decreased their Wage Limit for 2012.
 

ARE ALL OF YOUR EMPLOYEES CURRENT WITH THEIR FORM W-4?

Employees Exempt from Withholding:
An employee who certified to his employer on Form W-4, Employee’s Withholding Allowance Certificate, that he had no income tax liability for 2010 and anticipated no income tax liability for 2011 was entitled to an exemption from withholding for 2011. If the employee expects to incur income tax liability in 2011, a new Form W-4 must be given to the employer by February 15, 2012.
 
Change in Exemptions:
If an employee loses an exemption at the beginning of the New Year for any reason, they should also file a new Form W-4 for 2012. An employee who wishes to make changes to their current withholding should also file a new Form W-4.
 

EMPLOYERS – HAVE YOU TOLD YOUR EMPLOYEES ABOUT THE EARNED INCOME CREDIT (EIC)?

For 2011, you are encouraged to notify the following employees that they may be able to claim the EIC on their 2011 returns:
  • Employees with one qualifying child and wages less than $36,052. The employee’s copy of Form W-2 Tricom Funding prepares has the required statement about the EIC on the back of the form.
 
California Employers: California enacted a law effective 1/1/2008 which states that the information you provide on the back of W-2s is not sufficient notification of earned income credit. Please refer to the memo the Accounting Department will provide for more details.
 
There are six states that require employers to provide some additional notification to their employees about their possible eligibility for earned income credit. California, Illinois and Louisiana allow employers to use the Federal notice 797. New Jersey, Texas and Virginia require employers to use a state specific form. Tricom will have each of these forms available for download on our website under resources. Please contact your Accounting representative if you have any questions.
 

TRICOM HAS FRAUD PROTECTION

For those clients that process payroll using Tricom’s payroll account, you have very strong payroll fraud protection. Not only do Tricom’s checks have several levels of security, but Tricom is on a positive pay system. Each check that is presented for payment is verified with actual check registers to ensure the check was actually processed by Tricom. Each day, exceptions are checked and verified. Any fraud checks are rejected as fraud. Once this occurs, the client is notified. Even though these checks will never be honored, it is important to report this fraud to your local law enforcement agency. Typically, the employer will receive a collection call from the vendor where the check was cashed looking for payment. Tricom will provide you with an affidavit of forgery. This affidavit, along with a copy of the police report, will generally satisfy the victim of the fraud. If you have any questions about this process, please contact Mary Jo Heim at 262-509-6214. If you are currently not processing your full service payroll with Tricom’s fraud protected accounts, please contact Rick Gehrke at 262-509-6303.
 

TRICOM CAN MAIL YOUR W-2S FOR YOU

Tired of running to the post office to buy books of stamps? Tired of sticking all those stamps on every employee’s W-2? Tricom Funding will mail all W-2s from our office upon request. We will either mail ALL W-2s, including internal, or we will ship them all to you. If you would like us to mail them, please contact someone in Tricom’s Accounting Department to arrange this. You will be charged for the dollar amount of the postage on your Weekly Activity Payment Report after the W-2s have been mailed.
 

YEAR END PAYROLL ADJUSTMENTS & W-2 INFORMATION

Any adjustments to payroll records for 2011 must be in our office no later than Thursday, December 29, 2011. If you know you are going to have adjustments but do not believe you will have them to us by this date, please contact Mary Jo Heim (extension 214) by December 29th. Adjustments turned in to Tricom Funding after this date may cause delays in processing your W-2s and other year-end reports. Since the IRS requires W-2s to be distributed by January 31st, it is extremely important that we process adjustments early in order to meet this deadline.
 
The following information must be included on Form W-2:
  1. Group-term life insurance cost for coverage over $50,000
  2. Personal use of company auto
  3. Third-party sick pay
  4. Auto or expense account allowance not accounted for by employee
  5. Participation in a pension or deferred compensation plan
  6. Cost of fringe benefits (e.g. health insurance premiums) provided to a >2% shareholder of an S Corporation
 
If you or your employees are affected by any of the above items, please contact Mary Jo Heim by December 16th so we can properly account for them on the W-2s.
 

HOLIDAY BONUS RUNS:

All holiday internal payroll bonuses will be debited from your account. Please turn any holiday bonus requests into your payroll processor 24 hours prior to your regular payroll schedule. This will allow us extra time to accommodate any special calculations.
 

WHAT DO I NEED TO DO WITH MY YEAR END REPORTS?

During the month of January, Tricom Funding will send several reports and forms to your ofFi ce that will need your attention. Most of you will receive these in a shipment separate from your normal overnight package, so please watch for it. Below we have listed the major reports and forms and what to do with them when you receive them:
 
  • Employee’s Form W-2: We will use the four-to-a-page laser W-2 forms. Unless you notify us that you would like Tricom to mail your W-2s directly from our office, we will stuff all employees W-2s in non-sealed envelopes and ship them to you for stamping and mailing. If you do not want your W-2s in envelopes, please call Mary Jo Heim (extension 214) as soon as possible. If we do not hear from you, you will receive your W-2s in envelopes.
  • Employer Copy D Form W-2: You will receive a disk with employer copies of W-2s. These will not qualify as duplicate W-2s for your employees. They are just meant as a record for you to see total W-2 wages for your employees. Also, if you are ever audited or receive a tax notice, you may need this copy.
  • Payroll History Reports: To reduce the amount of unneeded paper in your office, we will not be sending year-end history reports unless you specifically request them. You can refer to your W-2 copies for yearly wages. Our Help Desk is also available to run individual employee histories when needed. To request a year-end history report for all employees, please contact a member of Tricom’s Accounting Department.
  • Tax reports: We will forward you copies of all tax reports that are Fi led with the federal, state and local governments. These are your copies and should be retained by you. You may need these in the future for audits or evidence of filing.
 

W-2 REPRODUCTIONS

If an employee has a request for a reproduction of a W-2 form, please fax a duplicate W-2 request form to our office and we will mail the reproduction out within 5 business days.
 
If you have any questions regarding W-2 reproductions, please contact the Help Desk. Please note that you will be charged .44 cents per W-2 that we mail for you. No W-2 reprints will be available prior to January 25, 2012.
 

HOW MUCH POSTAGE WILL I NEED?

To help you prepare your office with the appropriate amount of postage for mailing, feel free to contact theAccounting Department after January 25th for the total number of W-2 Forms being shipped to your office. However, Tricom can mail ALL W-2s for you from our office.  W-2 shipments will begin January 23-27th.
 

DECEMBER FINANCIAL STATEMENTS

Due to the volume of W-2s and government forms that need to be Fi led by January 31, 2012, we will be unable to complete December financial statements for everyone during January. We encourage you to send your information as early as possible. Your accountant at Tricom Funding will then contact you to work out an approximate schedule as to when you will receive your statements. Please note that your corporate tax returns (for most of you) will be due on March 15, 2012. This means your tax accountant will probably be requesting your year-end Financial Statement by the beginning of February. Therefore, the sooner we receive your information, the better we will be able to schedule completion of your statements.
 

NEWS FOR 2012

 

CALIFORNIA’S WAGE AND THEFT PROTECTION ACT

This act will add new employer requirements effective January 1, 2012. Employers will be required to provide each employee at time of hire with a written notice in the language the employer uses to communicate employment-related information to the employee. The notice must include the following information:
 
  1. Rate of pay and whether paid by the hour, shift, day week, salary, piece, commission or otherwise
  2. Allowance included in minimum wage like meals or lodging
  3. The employer’s regular pay day
  4. The name of the employer including any “doing business as” names
  5. The physical address of the employer’s main office or mailing address if different
  6. The employer’s phone number
  7. The name, address and phone number of the employer’s worker’s compensation insurance carrier
  8. It also leaves it open for additional items in the future if the Labor Commissioner feels other items are necessary.
 

PA ACT 32

In 2008, Pennsylvania Act 32 provided for restructuring of the Earned Income Tax collection system for local governments and school districts. It has been restructured into 69 Tax Collection Districts (TCD), primarily based on county boundaries. The changes contained in Act 32 become effective on 1/1/2012. Employers have a choice as to where they would like to submit their tax (which TCD). They may either submit to all the TCDs that they have office locations or submit all local funds to their main office (usually the office where payroll is processed.)
 
Starting on 1/1/2012, all new employees and those employees with an address change will need to complete a Residency Certificate Form. This form will include information on where the employee lives and where the employee works. The employer will be required to deduct the higher of the two appropriate taxes between the Live or Work locality. This change in calculation has required a number of programming updates to many payroll systems. Tricom has been working with our providers for quite some time on this project and will be ready for its 1/1/2012 implementation. If you have any questions as it relates to PA Act 32, please contact Mary Jo Heim.
 

IS E-VERIFY COMING YOUR WAY?

E-verify was authorized by the Illegal Immigration Reform and Immigrant Responsibility Act of 1996. This program is administered by the US Department of Homeland Security. More than 288,000 employers are currently using the system with 1,200 new businesses enrolling each year. Since 9/8/2009, the Federal government has required all of its contractors and their sub-contractors to use e-verify for all contracts/subs that will be paid over $3,000. In 2011, there are a total of seven (7) states that require either all employers or those employers who do business with the public government to use the e-verify system. For 2012 the following states have implemented e-verify is some manner:
 
Alabama:
1/1/12 Public Employers
4/1/12 Private Employers
 
Georgia:
1/1/12 Private Employers with 500+ employees
7/1/12 Private Employers with 100-499 employees
7/1/13 Private Employers with 11-99 employees
Private Employers with 1-10 employees are exempt
 
North Carolina:
10/1/12 Private Employers with 500+ employees
1/1/13 Private Employers with 100-499 employees
7/1/13 Private Employers with 25+ employees
 
Tennessee:
1/1/12 All State & Local Government Agencies and Private Employers with 500+ employees
7/1/12 Private Employers with 200-499 employees
7/1/13 Private Employers with 6-199 employees
 
Virginia:
12/1/12 State Agencies
 
Each year, more and more states are going to require employers to use the e-verify system. If you are not currently working in one of those states, now is the time to begin to look into this system. The website www.uscis.gov/everify is a great place to start. This system has many easy to understand features that will get you started on your way. If you have any questions on the e-verify system or how to enroll, please contact Mary Jo Heim or Amanda Jadro at Tricom. In addition, our year-end webinar series for November (which is recorded for you on the Tricom website) has a detailed discussion of the e-verify system and how it works.
 

DO YOU NEED A TUTOR?

Bringing on new staff can be a great way to add energy and new ideas to your team. On the downside, it can sometimes be hard to find the time to train new team members on how you do business and the business of staffing. You want them up to speed and contributing to your staffing company as soon as possible. Tricom can help.
 
In response to requests from our clients, Tricom is proud to offer our TUTOR Two-Day Operations Training Class.
 
This training is available to all Tricom clients, regardless of whether Tricom does your payroll processing or any back office functions. We’ve designed the TUTOR Program with your business operations in mind, so your internal staff is provided with the critical information they need to understand all facets of your staffing operations.
 
This comprehensive two-day class covers your staffing operation’s most essential functions, including:
  • Customers & Billing
  • Payroll & Billing Process
  • Workers’ Compensation
  • Reciprocity Rules/Unemployment Rules
  • Employees & Their Checks
  • Social Media
  • Accounts Receivable
  • Credit & Collections
 

Questions? For questions about the next class dates, transportation or accommodations, please contact either Mary Jo Heim or Amanda Jadro at 800-348-4815.

 
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