2013 Year End Bulletin

2013 Year End Bulletin

Take the stress out of 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. 

Read on for all current information or download the print version here.

 

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 2012 and anticipated no income tax liability for 2013 was entitled to an exemption from withholding for 2013. If the employee expects to incur income tax liability in 2013, a new Form W-4 must be given to the employer by February 18, 2014.

 

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 2014. 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 2013, you are encouraged to notify the following employees that they may be able to claim the EIC on their 2013 returns:

• Employees with one qualifying child and wages less than $37,870. The employee’s copy of Form W-2 Tricom Funding prepares has the required statement about the EIC on the back of the form.

 

State Earned Income Tax Credit Notice Requirements:

There are seven states that require employers to provide some additional notification to their employees about their possible eligibility for earned income credit. To the right is a chart that explains what type of notice requirement is necessary and when this notice must be given. 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.

 

State         Notice Requirement                   When Must Notice be given

CA             Federal Notice 797                       Within one week before or after or at the same time that the employer provides a Form W-2 to the employee

 

IL               Federal Notice 797                       Within one week before or after or at the same time that the employer provides a Form W-2 to the employee

 

LA              Federal or LA Notice                    At the time of hiring

 

MD             Maryland Sample Notice             By December 31 of each calendar year

 

NJ               State Treasurer NJ                      Between January 1 and February 15 of each year 

 

TX               Federal Notice 797                    No later than March 1 of each year

 

VA               Notice provided by Virginia        Notice must be posted in the same location where other employee notices required by state or federal law are posted.
                   Department of Social Services

 

 

 

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 also on a positive pay system. Each check presented for payment is verified with actual check registers to ensure the check was 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 2013 must be in our office no later than Monday, December 30, 2013. 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 30th. Adjustments turned in to Tricom Funding after this date may cause delays in processing your W-2s, and you may incur additional charges. 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

7. Aggregate value of employer sponsored health care paid by both employer and employee for employers with more than 250 W-2’s for 2012.

 

If you or your employees are affected by any of the above items, please contact

Mary Jo Heim by December 20th 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 in any holiday bonus requests to 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 office 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 or if you would like your W-2s sealed, please call Mary Jo Heim (extension 214) as soon as possible. If we do not hear from you will receive your W-2s in unsealed 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 filed 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.

 

Save Space: Tricom’s Accounting Department can scan your company’s year-end reports and e-mail them (using secure transmission). If you would like your reports sent via e-mail instead of paper reports, please contact a member of Tricom’s Accounting Department.

 

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 24 hours. If you have any questions regarding W-2 reproductions, please contact the Help Desk. Please note that you will be charged $.46 per W-2 that we mail for you. No W-2 reprints will be available prior to January 25, 2014.

 

HOW MUCH POSTAGE WILL I NEED?

To help you prepare your office with the appropriate amount of postage for mailing, feel free to contact the Accounting Department after January 20th 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. Please see the middle of page 2 of this bulletin for details. W-2 shipments will begin January 20-24th.

 

DECEMBER FINANCIAL STATEMENTS

Due to the volume of W-2s and government forms that need to be filed by January 31, 2014, 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 17, 2014. 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.

 

SOCIAL SECURITY WAGE LIMIT INCREASE

The Social Security Administration has increased the taxable wage base for 2014 from $113,700 to $117,000. The Medicare taxable wage base was eliminated in 1994, therefore all earned income will be subject to Medicare tax. Again for 2014, employers are required to withhold an additional .9% Medicare tax on wages or compensation it pays to an employee in excess of $200,000 in a calendar year. There is no employer match to this additional Medicare tax, and there is no requirement for the employer to notify the employee. The employee tax rate for Social Security is currently at 6.2% (employer rate is 6.2%) and Medicare (both employee and employer) remains unchanged at 1.45 %.

 

ADDITIONAL FEDERAL CHANGES

• 401K Limit has stayed the same for 2014 at $17,500. The catch-up contribution for those employees over 50 years of age has not changed from $5,500.

• The limit for Flexible Spending Account deductions under a cafeteria plan is $2,500 per employee.

 

CONTINUE TO USE TRICOM AS YOUR EDUCATIONAL RESOURCE

Tricom will continue to bring you its Industry Insider webinar series in 2014 with topics that are important to staffing and business owners in general.

 

In 2012, Tricom began presenting its “Sales TUTOR Seminar.” TUTOR is Tricom’s educational seminars in both Sales and Operations for your internal staff. Tricom will post on our website and send e-mail notices and overnight flyers as to the 2014 dates of these informative seminars.

 

FEDERAL UNEMPLOYMENT LOAN STATUS

The Department of Labor released the listing of the states that will have Federal Unemployment Tax (FUTA) Credit Reductions for 2013:

 

Arkansas                     .9%

California                    .9%

Connecticut                 .9%

Delaware                     .6%

Georgia                        .9%

Indiana                        1.2%

Kentucky                    .9%

Missouri .                   9%

New York                   .9%

North Carolina            .9%

Ohio                            .9%

Rhode Island               .9%

Virgin Island                1.2%

Wisconsin                   .9%

 

NEW TAX RATES FOR 2014

As in past years, there are several new tax rates going into affect on January 1, 2014. The following is a list of states that have made us aware of changes in their rates: Arkansas, California, Minnesota and North Carolina.

 

MINIMUM WAGE INCREASES FOR 2013

State                           To                   From

Arizona                       $7.90               $7.80

California*                  $9.00              $8.00

Colorado                     $8.00               $7.78

Connecticut                 $8.70               $8.25

Florida                         $7.93               $7.79

Missouri                     $7.50               $7.35

Montana                     $7.90               $7.80

New Jersey                 $8.25               $7.25

New York                   $8.00               $7.25

Ohio                            $7.95               $7.85

Oregon                        $9.10               $8.95

Rhode Island               $8.00               $7.75

San Francisco (City)   $10.74             $10.55

Vermont                      $8.73               $8.60

Washington                 $9.32               $9.19

 

* This does not take affect until July 1, 2014

 

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 2014, California has increased the disability wage base from $100,880 in 2013 to $101,636. The employee contribution rate will remain at 1%. New Jersey has changed the employee tax rate for 2014. The wage base will increase to $31,500 from $30,900. The employee unemployment tax rate will stay the same, the employee disability rate will increase from .36% to .38% and the FLI rate will stay the same at .1%. The total employee rate will increase from .885% to .905%.

 

ILLINOIS DEPARTMENT OF EMPLOYMENT SECURITY REQUIRES ADDITIONAL REPORTING

In 2014, employers that have 50 or more employees are required to begin monthly wage reporting. Last year as part of Medicaid reform, Governor Pat Quinn signed a bill in 2012 requiring those employers (with more than 250 employees) who file their wage reports electronically to file wage reports on a monthly instead of quarterly basis. This initial requirement has now been reduced to those employers with 50 or more employees. The goal is to reduce Medicaid and UI fraud by finding it and stopping it sooner. If the state is able to discover if any individual is working and how much they are earning earlier, the state can cut off the UI benefits sooner to those people trying to defraud the system by continuing to collect benefits while working.

 

The monthly report requires employee name, employee social security number and total wages reported for the period (month). The information can be reported using the Tax Net system that is currently in place.

 

ALL NORTH CAROLINA EMPLOYEES NEED TO COMPLETE A NEW EMPLOYEE’S WITHHOLDING ALLOWANCE CERTIFICATE FOR 2014

North Carolina general assembly recently enacted House Bill 998. This new law no longer allows a personal exemption for yourself, your spouse, children or any other qualifying adult. This law goes into effect for tax years beginning January 1, 2014.

 

As a result of this law, every NC employer must have all employees provide a new Employers Withholding Allowance Certificate, with Form NC-4 or Form NC-4 EZ. The form must be completed by the employee and provided to the employer so the correct amount of State income tax is withheld for any payment periods beginning on or after January 1, 2014. If an employee fails to provide the employer with the applicable updated form, the employer is required to withhold North Carolina tax – “Single” with no allowances. Copies of the forms as well as instructional materials to assist employers are available at www.dornc.com.

 

MASSACHUSETTS REPEALS ONE HEALTHCARE CONTRIBUTION AND REPLACES IT WITH ANOTHER

In July 2013, the Fair Share Contribution (FSC) to the state’s health care program was repealed. This was repealed because the requirements of the Affordable Care Act are similar, and the state wanted to avoid duplication.

 

As of January 1, 2014 employers will be required to make a medical assistance contribution (MAC). The MAC will be used to fund the health care program the state provides to residents who do not have health insurance. The MAC rate will be .36% up to the state unemployment insurance taxable wage base. This is an employer paid contribution — it is not withheld from an employee’s pay. An employer is required to pay the contribution regardless of whether or not it provides health insurance for employees.

 

Employers with five or fewer employees will not be required to make a contribution.

New employers with six or more employees will be subject to the law after 12 months in operation. After that, the contribution rate for a new employer is .12% in the first year, .24% in the second calendar year and .36% in the third and subsequent years.

 

MINNESOTA AND WISCONSIN FAIL TO RESTORE RECIPROCITY FOR 2014

Minnesota and Wisconsin did not meet their October 1, 2013 deadline for an income tax reciprocity agreement to be in place for tax year 2014. Both states were working to restore the reciprocity, but Wisconsin did not agree with an additional $6 million that Minnesota wanted them to pay in tax credits. Without reciprocity, a resident of one state who works in the other state is required to file personal income tax returns and pay taxes in both states. It is not known whether restoring the reciprocity is a goal for 2015.

 

RHODE ISLAND ENACTS TEMPORARY CAREGIVER INSURANCE PROGRAM

In July 2013, Rhode Island Governor Chafee signed legislation creating temporary caregiver insurance (TCI) within the existing temporary disability (TDI) program. TCI will provide eligible claimants up to four weeks of caregiver benefits to care for a seriously ill child, spouse, domestic partner, parent, parent-in-law, or grandparent, or to bond with a newborn child, new adopted child or new foster-care child. The current TDI plan is funded through employee contributions. The new TCI program will be financed through employee TDI contributions; there will not be a separate or additional employee contribution.

 

NEW YORK ENACTS WAGE DEDUCTION REGULATIONS

The new wage deduction regulations for New York were effective October 9, 2013. These regulations Permit 4 categories of deduction:

1. Deductions made in accordance with any law rule or regulation issued by any governmental agency;

2. Deduction specified by, or similar to, those in state labor law that are authorized by, and for the benefit of the employee;

3. Deductions for the recovery of overpayments;

4. Deductions for repayment of wage advances.

 

Each of these categories are explained in detail on the New York State Department of Labor website https://labor.ny.gov/legal/wage-deductionregulation.shtm.

 

There are seven (7) deductions that are specifically prohibited within these regulations:

1. Repayments of loans, advances, overpayments, that are not in accordance with the regulation;

2. Employee purchases of tools, equipment and attire required for work;

3. Recoupment of unauthorized expenses;

4. Repayment of employer losses, including spoilage and breakage, cash shortages, and fines or penalties incurred by the employer through the conduct of the employee;

5. Fines or penalties for tardiness, excessive leave, misconduct, quitting without notice;

6. Contributions to political action committees, campaign and similar payments;

7. Fees, interest or the employer’s administrative costs.

 

Employers must keep records of any authorizations they receive from employees for at least six years after employment ends. These new regulations expire November 6, 2015.

 

NEW YORK MTA TAX UPHELD

On October 10, 2013, the New York Court of Appeals (the state’s highest court) dismissed an appeal seeking to overturn the Metropolitan Commuter Transportation Mobility Tax (known as the MTA payroll tax). Nassau County Executive Edward Mangano appealed a June ruling by a lower court; his view was that the tax was unconstitutional. The Court of Appeals dismissed the appeal on the grounds that no substantial constitutional question was directly involved. Mangano can still appeal the ruling on other grounds.

 

UNEMPLOYMENT INSURANCE INTEGRITY

The Trade Adjustment Assistance Extension Act (TAAEA) of 2011 provides for a statutory subsection in the Federal Unemployment Tax Act which mandates unemployment insurance (UI) agencies prohibit relieving employers of the benefit charges to their unemployment tax account when both of the following scenarios exist:

1. UI benefits were improperly paid because the employer or their agent was at fault for failing to respond in a timely manner to the agencies’ request for information relating to an unemployment claim.

2. The employer or agent has established a pattern of failing to respond to such requests in a timely or adequate manner.

 

Under the new requirements, employers are expected to improve the quality of information provided to state unemployment agencies at the front end of the UI claims process, rather than waiting until after the initial determination is rendered to perfect the response.

 

What does this mean to a staffing company?

States have been mandated to establish more firm deadlines to receive unemployment wage information. Some states have put penalties into place if a company fails a certain percentage or number of times to submit appropriate unemployment data to the state unemployment agency. (Maryland charges $15 per occurrence after the second infraction). See the chart to the right to understand each state’s UI Integrity Penalties.

 

How can you better report unemployment information?

Responding to paper-based UI information requests fully and within tight deadlines creates a significant and costly administrative burden on companies. It become even more difficult when companies have offices in many states. The State Information Data Exchange System (SIDES) and SIDES E-Response offers employers a solution free of charge. Developed through a strategic partnership between the U.S. Department of Labor and state UI agencies, this system provides a secure, electronic and nationally standardized format in which they can easily respond to UI information requests. For more information UI SIDES, visit http://infor.uisides.org/.

 

WHAT DO I DO WITH W-2S THAT GET RETURNED UNDELIVERABLE?

Inevitably each year there are W-2 forms that are returned to your office “undeliverable.” What should you be doing with these? Treasurer regulations state that they must be retained for a 4-year period. The “4-year period” means that employers must “maintain such records for at least four years after the due date of such tax for the return period to which the records relate.” For a 2013 W-2, the due date for the tax return is April 15, 2014. Four years after that is April 15, 2018.

 

2014 UNEMPLOYMENT WAGE BASES

State                           2014                2013

Alabama                      8,000               8,000

Alaska                                                 36,900

Arizona                       7,000               7,000

Arkansas                     12,000             12,000

California                    7,000               7,000

Colorado                     11,700             11,300

Connecticut                 15,000             15,000

Delaware                     18,500             10,500

Washington DC          9,000               9,000

Florida                         8,000               8,000

Georgia                        9,500               9,500

Hawaii                                                 39,600

Idaho                                                   34,800

Illinois                         12,960             12,900

Indiana                        9,500               9,500

Iowa                            26,800             26,000

Kansas                        8,000               8,000

Kentucky                    9,600               9,300

Louisiana                     7,700               7,700

Maine                          12,000             12,000

Maryland                    8,500               8,500

Massachusetts            14,000             14,000

Michigan                     9,500               9,500

Minnesota                   29,000             29,000

Mississippi                 14,000             14,000

Missouri                     13,000             13,000

Montana                     29,000             27,900

Nebraska                     9,000               9,000

Nevada                        27,400             26,900

New Hampshire          14,000             14,000

New Jersey                 31,500             30,900

New Mexico               23,400             22,900

New York                   10,300             8,500

North Carolina                                    20,900

North Dakota                                      31,800

Ohio                            9,000               9,000

Oklahoma                    18,700             20,100

Oregon                        35,000             34,100

Pennsylvania               8,750               8,500

Puerto Rico                 7,000               7,000

Rhode Island               20,600/            20,200 or

                                    22,000*           21,700*

South Carolina            12,000             12,000

South Dakota              14,000             13,000

Tennessee                   9,000               9,000

Texas                           9,000               9,000

Utah                                                    30,300

Vermont                      16,000             16,000

Virginia                        8,000               8,000

Washington                 41,300             39,800

West Virginia              12,000             12,000

Wisconsin                   14,000             14,000

Wyoming                                            23,800

 

*The first rate represents most employers, the higher rate is for those companies with the highest unemployment rate.

§  Fifteen states increased their Wage Limit for 2014.

§  One state decreased their Wage Limit for 2014.

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