Applicable Federal Rates (AFRs) for March

The Applicable Federal Rates (AFRs) for the month of March are as follows:

	Annual	Semiannual	Quarterly	Monthly
Short-term (≤3 years)	0.26%	0.26%	0.26%	0.26%
Mid-term (>3 years but ≤ 9 years)	1.05%	1.05%	1.05%	1.05%
Long-term (>9 years)	2.97%	2.95%	2.94%	2.93%

President Signs Payroll Tax Cut Bill

About 6:59 PM eastern time yesterday evening (February 22), President Obama signed the Middle Class Tax Relief and Job Creation Act (H.R. 3630) into law.  The bill extends the payroll tax cut and jobless benefits through the end of the year. 

The bill will continue the 2% reduction in the social security tax paid by employees in their paychecks.   The rate, currently at 4.2% will remain until the end of the year.  Good news for the employees.

Included in the bill is a repeal of the recapture provision that existed in the temporary cut done in December.  For those that had large income in January & February, you will not need to repay any of your savings under the new bill.

Applicable Federal Rates (AFRs) for January

The Applicable Federal Rates (AFRs) for the month of January are as follows:

	Annual	Semiannual	Quarterly	Monthly
Short-term (≤3 years)	0.38%	0.38%	0.38%	0.38%
Mid-term (>3 years but ≤ 9 years)	1.50%	1.49%	1.49%	1.49%
Long-term (>9 years)	3.47%	3.44%	3.43%	3.42%

Year End Payroll Reminders For Employers

The following was included an article by the American Payroll Association (APA) which noted some tasks that employers should perform in December and January to make year-end processing go more smoothly.

December

Remind workers who have had life changes, such as marriage, divorce, or a change in the number of dependents, to make the appropriate changes to their withholding on Form W-4.

Remind employees who wish to continue claiming exemption from withholding to submit a new Form W-4 by Feb. 15, 2012. Beginning Feb. 16, 2012, you must withhold based on a marital status of “single” with zero withholding allowances for employees who claimed exemption from withholding in 2011, but who have not submitted a 2012 Form W-4.

Collect benefit and payroll adjustment information and post to employees' payroll records. This information should include relocation, educational assistance, group-term life insurance, third-party sick pay, company cars, manual checks, and void checks.

Order enough W-2 forms for all the employees who have worked for you this year, as well as some extras to allow for any mistakes. Consider preparing, printing, and filing W-2s online at the Social Security Administration (SSA) website, if you don't do this already.

Verify employees' names and Social Security Numbers (SSNs) at http://www.ssa.gov/employer/ssnv.htm.

Run a special payroll, if necessary, to record all manual and voided checks issued between the last regular payroll and December 31st.

Conduct a final review of the general ledger for hidden wages (generally, taxable noncash fringe benefits).

Make sure your payroll system will be updated by January 1 to take into account any changes in federal tax-free limitations and state unemployment taxable wage bases.

December-January

Obtain new forms, withholding tables, and publications. Review the new Social Security wage base, deferred compensation limits, mileage rates, and state unemployment wage bases.

Let employees know about changes to tax figures. The above communications may help reduce the number of questions that you receive from employees in the coming months.

January 1

Reset all year-to-date balances to zero.

Reset all wage bases, rates, and taxable limits.

Rember that all W-2s need to be mailed no later than January 31, 2012.

Hope the above was helpful and hope your year end processing goes smoothly.

Applicable Federal Rates (AFRs) for December 2011

The Applicable Federal Rates (AFRs) for the month of December are as follows:

	Annual	Semiannual	Quarterly	Monthly
Short-term (≤ 3 years)	0.45%	0.45%	0.45%	0.45%
Mid-term (> 3 years but  ≤ 9 years)	1.69%	1.68%	1.68%	1.67%
Long-term (> 9 years)	3.55%	3.52%	3.50%	3.49%

CPA Licensure Requirements

Anybody that will soon be graduating with an accounting degree or that is currently working on getting their CPA license knows that the rules for licensure in California have been a hot topic for quite some. One of our partners, Glen Thomas, is on the Californnia CPA Society Accounting Education Committee along with UC Berkeley Professor Maria Nondorf. Professor Nondorf recently created a Powerpoint presentation which clearly presents the CA CPA licensure requirements. If you have any confusion regarding the new rules here is a link to Professor Nondorf's presentation which should help clarify.

The Pathway For Accounting Students

Good luck to all you future CPAs.