June Local and State News

Federal News

IRS changes to Form 941-X: The IRS has updated Form 941-X.  Form 941-X is used to correct mistakes that were previously filed on Form 941.

The employee social security rate is now 4.2% and the employer social security tax rate is 6.2% - these amounts should be used to fill out amounts reported on lines 8 and 9.

Form 941-X can be used to correct.

  • Wages, tips and all compensation
  • Income withheld from wages, tips and all compensation
  • Taxable wages such as; social security wages, social security tips and Medicare
  • Advance earned income credit payments that were given to employees in quarters that ended prior to January 1, 2011
  • COBRA premium assistance payment credits
  • Credits for qualified employer’s share of social security tax on wages and tips paid to qualified employees March 31-31, 2010, only second quarter 2010
  • Exemptions for qualified employer’s share of social security tax on wages/tips paid to qualified employees, for quarters ending after March 31, 2010 and before January 1, 2011

(Information from the IRS)

State News

Alabama

Unemployment (UI) Insurance Administration: The Alabama Labor Department will begin administering the state’s unemployment insurance program starting October 1, 2012.

Interest Rate on Income Tax Withholding: The interest rate on all unpaid income tax withholding in Alabama will be 3% for the third quarter, July 1, 2012 - September 30, 2012.

Arizona

Interest Rate on Income Tax Withholding: The interest rate on all unpaid income tax withholding in Arizona will be 3% for the third quarter, July 1, 2012 - September 30, 2012.

Internal Revenue Code Updated: State law references to the Internal Revenue Code have been updated to reflect the Internal Revenue code of 1986, as amended through December 31, 2011. The new code will take effect August 2, 2012.

Additional New Hire Reporting: To comply with the federal law, employers must disclose the first day a new employee provides service for compensation on new hire reports. The new law becomes effective August 2, 2012.

Terminated Employee Payment: Beginning August 8, 2012, involuntarily fired employees must be paid by the employer by either the end of the next regular pay cycle or within 7 work days, whichever is earlier.

California

Minimum Wage Increase: The San Hose City Council announced an initiative to increase the city’s minimum wage from $8.00 to $10.00, the proposal will be on the general election ballot on November 6, 2012.

Contracts for Commission Paid Employees: Effective January 1, 2013 employers will be required to enter into a written contract with an employee who’s pay is based on commission. The contract must acknowledge how the commission is calculated and paid and must be signed by both the employer and employee. The employee must have a signed copy of the contract, the employer must obtain a written acknowledgment the employee received the contract.

Georgia

Internal Revenue Code Updated: For tax years beginning after January 1, 2011, the state law references to the Internal Revenue Code were updated to reflect the Internal Revenue code of 1986, as amended through December 31, 2011.

Unemployment Insurance Taxable Wage Base Increase: Beginning January 1, 2013, unemployment insurance taxable base will be increased to $9,500, previously $8,500.

Hawaii

Additional New Hire Reporting: To comply with the federal law, as of April 20, 2012 employers must disclose the first day a new employee provides service for compensation on new hire reports.

Kansas

Personal Income Tax Rate Restructured On May 22, Governor Sam Brownback signed legislation, H.B. 2117, that restructured personal income tax rates and brackets for 2013. Additionally, the legislation increased the standard deduction for married and head-of-the-household filers to $9,000, previously $6,000 and $4,500, respectively.

Louisiana

Payroll Services Must Include Account Number: The Department of Revenue is enforcing payroll service providers that state withholding returns to include correct account numbers. The payroll provider will be liable to fees if this is not done properly.

Withholding Returns Required: Beginning July 1, 2012 employers will be responsible for filing withholding returns every quarter. Form L-1 is due the last day of the month following the corresponding quarter. Employers may request a filing extension of 30 days or less for an annual reconciliation return, Form L-3. All late filing or failure to file will result in a penalty.

Massachusetts

Unpaid Income Tax Withholding Tax Rate: The interest rate on all unpaid income tax withholding in Massachusetts will be 4% for the third quarter, July 1, 2012 - September 30, 2012.

Maryland

Personal Income Tax (PIT) Rates Increased: Retroactive January 1, 2012, single filers earning over $250,000 and joint filers earning over $300,000 have a new high tax rate of 5.75%, previously 5.5%. Tax brackets adjustments also increased the PIT rates for single filers earning over $100,000 and joint filers earning over $150,000.

Nebraska

New Hire Reporting Requirements: Beginning October 1, new hire reporting requirements will no longer be necessary for employees who are rehired after layoffs of less than 60 days.

North Carolina

Interest Rate on Income Tax Withholding: The interest rate on all unpaid income tax withholding in North Carolina will be 5% for the third quarter, July 1, 2012 - September 30, 2012.

Rhode Island

New Hire Reporting Requirements: Effective April 12, new hire reporting requirements were updated to conform to the federal requirement’s definition of a “new hire”. New hire reports must contain the following information:

  • Employee’s name, address and Social Security Number
  • Date of hire or rehire
  • Employer’s name, address, and federal employer identification number

South Dakota

Additional New Hire Reporting: To comply with the federal law, as of January 16, 2012 employers must disclose the first day a new employee provides service for compensation on new hire reports.

Tennessee

Tips Not Considered in Disposable Wages: According to the Court of Appeals of Tennessee, tips should not be incorporated when calculating disposable wages for a credit garnishment.

Virginia

Interest Rate on Income Tax Withholding: The interest rate on all unpaid income tax withholding in Virginia will be 5% for the third quarter, July 1, 2012 - September 30, 2012.

West Virginia

New Hire Reporting Requirements New hire reporting requirements were changed to include specific independent contractors.

Effective June 5, filing form requirements were revised. Employers are required to submit new-hire reports:

  • Within 14 days of the employees hire or rehire
  • Within 14 days of initiating payments that are more than $2,500 in any year or within 14 days of signing a contract that outlines such payments
  • Through a twice monthly magnetic or electronic submissions that must be 12 - 16 days apart

Make sure you also read State and Local Government Updates for May.

Get a Free Demo

Fill out the form below & we'll email you a video product demo!

Which solution are you interested in?
Optimum Solutions will not sell, rent, or lease your personal information.

Executive VP of Operations Con Van Roekel, Echo Group, Inc.

I wanted to tell you that we are very happy with the software and the support. We had 325 people in that payroll and we had no errors. Thank you very much for the help during the installation and training. I hope the future is as pleasant as the past.