Monday, December 5, 2011

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.

Monday, November 28, 2011

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%

Wednesday, November 16, 2011

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.

Monday, October 31, 2011

Labor Department Expands Enforcement Of Wage Violations

The Labor Department is signing agreements to share information with nearly a dozen states and the Internal Revenue Service as it gets more aggressive in its program to crack down on businesses that cheat workers out of their wages. The information will help Labor officials target businesses that improperly label workers as independent contractors or as non-employees to deprive workers of minimum wage and overtime pay. Misclassifying workers also lets companies avoid paying workers compensation, unemployment insurance and federal taxes. Patricia Smith, the Labor Department's top lawyer, said sharing information between state and federal agencies could subject businesses to multiple fines. "There's more of an incentive to be in compliance because the cost of what we consider to be illegal activity has increased," Smith said in an interview. In the past, Smith said, a company might pay a single fine to a state agency for not making proper unemployment insurance payments. Under the new agreements, a state can share the information with the Labor Department, which also can seek fines and penalties for federal wage violations. The violation also would be reported to the IRS, which can go after the company for unpaid taxes, Smith said. States that have agreed to work with the Labor Department so far include Connecticut, Hawaii, Maryland, Massachusetts, Minnesota, Missouri, Montana, Utah and Washington. Labor officials from New York and Illinois plan to sign up in the near future. Recently, the agency began targeting large U.S. homebuilders to see if they failed to pay workers the minimum wage or overtime. The Labor Department collected nearly $4 million in back wages on behalf of about 6,500 employees who had been misclassified, a 400 percent increase over the amount collected in 2008. The department has hired about 300 additional investigators to probe wage theft complaints.

Applicable Federal Rates (AFRs) for November 2011

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


Annual
Semiannual
Quarterly
Monthly
Short-term (≤ 3 years)
0.41%
0.41%
0.41%
0.41%
Mid-term (> 3 years but ≤ 9 years)
1.38%
1.38%
1.38%
1.38%
Long-term (> 9 years)
3.41%
3.38%
3.37%
3.36%

Friday, October 28, 2011

Top Earners Doubled Share of Nation’s Income

The top 1 percent of earners more than doubled their share of the nation’s income over the last three decades, the Congressional Budget Office said Tuesday, in a new report likely to figure prominently in the escalating political fight over how to revive the economy, create jobs and lower the federal debt. In addition, the report said, government policy has become less redistributive since the late 1970s, doing less to reduce the concentration of income. “The equalizing effect of federal taxes was smaller” in 2007 than in 1979, as “the composition of federal revenues shifted away from progressive income taxes to less-progressive payroll taxes,” the budget office said. Also, it said,federal benefit payments are doing less to even out the distribution of income, as a growing share of benefits, like Social Security, goes to older Americans, regardless of their income. In its report, the budget office found that from 1979 to 2007, average inflation-adjusted after-tax income grew by 275 percent for the 1 percent of the population with the highest income. For others in the top 20 percent of the population, average real after-tax household income grew by 65 percent. By contrast, the budget office said, for the poorest fifth of the population, average real after-tax household income rose 18 percent. And for the three-fifths of people in the middle of the income scale, the growth in such household income was just under 40 percent. The findings, based on a rigorous analysis of data from the Internal Revenue Service and the Census Bureau, are generally consistent with studies by some private researchers and academic economists. But because they carry the imprimatur of the nonpartisan budget office, they are likely to have a major impact on the debate in Congress over the fairness of federal tax and spending policies. Also cited as factors contributing to the rapid growth of income at the top were the structure of executive compensation; high salaries for some “superstars” in sports and the arts; the increasing size of the financial services industry; and the growing role of capital gains, which go disproportionately to higher-income households.

Thursday, October 27, 2011

Guidance Issued on Tax Treatment of Business Cell Phones

The IRS recently issued a notice providing guidance on the tax treatment of employer-provided cell phones now that they have been removed from the definition of listed property. The notice discusses the treatment of employer-provided cell phones as an excludible fringe benefit. The IRS says it has received questions about the tax treatment of employer-provided cell phones and similar telecommunications equipment in the wake of changes enacted by the Small Business Jobs Act of 2010. Prior to the act, cell phones were included under the definition of “listed property” and, for employers to deduct the cost of cell phones they provided to employees, strict substantiation requirements had to be met. The Small Business Jobs Act removed cell phones from the definition of listed property for tax years beginning after Dec. 31, 2009. However, the IRS points out that the act did not otherwise alter the requirement that an employer-provided cell phone be treated as a fringe benefit, the value of which must be included in the employee’s gross income, unless exclusion applies. The IRS says that the value of the business use of an employer-provided cell phone is excludible from an employee’s income as a working condition fringe to the extent that, if the employee paid for the use of the cell phone, the employee would be able to deduct such payment as a trade or business expense. For such treatment to apply, the cell phone must be provided to the employee for noncompensatory business reasons, for example, to speak with clients when away from the office. The notice says a cell phone provided to promote employee morale or goodwill is not provided primarily for a noncompensatory business reason. The notice says that, if an employer provides an employee with a cell phone primarily for noncompensatory business reasons, the IRS will treat the employee’s use of the cell phone for reasons related to the employer’s trade or business as a working condition fringe benefit, the value of which is excludible from the employee’s income. The IRS will also treat any personal use of such a cell phone as a de minimis fringe benefit, excludible from the employee’s income.

Wednesday, October 26, 2011

Move To Ease Student Loan Burdens

President Obama recently announced a plan to allow college graduates to cap federal student loan repayments at 10 percent of discretionary income starting in January 2012, two years before the cap was due to take effect under federal law. The accelerated “pay as you earn” program, which Obama will authorize through executive order, could benefit up to 1.6 million borrowers and reduce their payments by as much as a couple hundred dollars a month, administration officials said. All remaining debt on the federal loans would be forgiven after 20 years — five years earlier than under current law. In addition, some borrowers who have more than one federal student loan will be allowed to consolidate their debt, in some cases reducing their interest rates by up to half a percentage point, officials said. “These are real savings that will help graduates get started in their careers,” Education Secretary Arne Duncan said in a conference call with reporters on Tuesday. “These changes could make a big difference in the lives of current college students and recent graduates as they enter one of toughest job markets in recent memory.” Yet it remains unclear how many people will take advantage of the offer--even with the economy lagging and college tuition prices continuing to rise. Since 2007, borrowers have been allowed to cap federal student loan repayments at 15 percent of discretionary income. But White House officials acknowledged that just 450,000 of the nation’s 36 million student loan borrowers are participating in the income-based repayment program. Under current law, former students are allowed to cap repayments of federal loans at 15 percent of discretionary income. Last year, Congress approved legislation that would reduce the amount to 10 percent in 2014. Obama is using his executive authority to create a separate provision that would offer the same program in 2012, said Melody Barnes, Obama’s domestic policy adviser. Barnes said that the initiative is partially a response to a petition signed by more than 30,000 people on “We the People,” a recently added section of the White House’s Web site aimed at allowing citizens to lobby for action. It marks the first time the White House has taken action in response to a petition, she said. “They rightly pointed out the weight of this debt in preventing college graduates from achieving their dreams,” Barnes said. She emphasized that the program will not cost taxpayers anything because the administration plans to use savings from the elimination of loan subsidies to pay for the reduction on interest rates on loans that are consolidated. Those interested in learning more about the new programs can call 1-800-4FEDAID or go to www.studentaid.ed.gov.

Wednesday, October 12, 2011

Auditor to IRS: Speed it up

The IRS could quicken the pace of its responses to taxpayers, a new government audit has found. The Treasury Department’s inspector general for tax administration, in a recent report, says that the IRS almost always responds accurately to taxpayer inquiries. But, the audit adds, the agency is not nearly as successful in getting back to taxpayers within its self-imposed 30-day deadline. “Inadequate and untimely responses to taxpayer correspondence adversely affect taxpayers and tax administration,” Russell George, the tax administration inspector general, said in a statement. The audit looked at three separate sets of responses from the IRS, finding them to be accurate at least 80 percent of the time in all three. But the replies were timely only between 10 and 56 percent of the time. The inspector general also found that interim letters, required if a reply cannot be made within 30 days, were not always issued. In all, the audit recommended that the IRS study the interim letter process and clarify instructions for employees, among other things. In its response, the IRS, which received 20 million pieces of correspondence in 2010, quibbled with the how audit compiled its statistics. The agency also noted that it had staffing constraints and defended its use of interim letters.

Monday, October 10, 2011

FASB Issues Multiemployer Pension Plan Standard

After more than a year of debate the Financial Accounting Standards Board has released a new Accounting Standards Update aimed at improving employer disclosures for multiple-employer pension plans. Read below for more information on the new requirements and effective dates. Accounting Standards Update No. 2011-09, “Compensation— Retirement Benefits—Multiemployer Plans (Subtopic 715-80): Disclosures about an Employer’s Participation in a Multiemployer Plan,” is intended to encourage employers to supply additional information about their financial obligations to multiemployer pension plans. Those plans typically are used to provide benefits to union employees, who may work for many employers during their working life, allowing them to accrue benefits in a single pension plan for their retirement. Up to now, employers have been required to disclose only their total contributions to all of the multiemployer plans in which they participated. The new disclosures, as proposed in July, go much further (see FASB Requires More Pension Plan Disclosures). They include the amount of employer contributions made to each significant plan and to all plans in total; an indication of whether the employer’s contributions represent over 5 percent of the total contributions to the plan; an indication of which plans, if any, are subject to a funding improvement plan; and the expiration dates of any collective bargaining agreements and any minimum funding arrangements. Another change involves the most recent certified funded status of the plan, as determined by the plan’s so-called “zone status,” a requirement of the Pension Protection Act of 2006. If the “zone status” is not available, an employer will be required to disclose whether the plan is less than 65 percent funded, between 65 percent and 80 percent funded, or at least 80 percent funded. The update, which was released Wednesday, also requires a description of the nature and effect of any changes that affect the comparability for each period in which a statement of income is presented. The September 2011 edition of FASB in Focus provides an overview of the main provisions in the update. For public entities, the enhanced disclosures will be required for fiscal years ending after Dec. 15, 2011. For nonpublic entities, the enhanced disclosures will be required for fiscal years ending after Dec. 15, 2012. Early application will be permitted.

Wednesday, September 28, 2011

Applicable Federal Rates (AFRs) for October 2011

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


Annual
Semiannual
Quarterly
Monthly
Short-term (≤ 3 years)
0.32%
0.32%
0.32%
0.32%
Mid-term (> 3 years but ≤ 9 years)
1.27%
1.27%
1.27%
1.27%
Long-term (> 9 years)
3.51%
3.48%
3.46%
3.46%


Tuesday, August 30, 2011

Holiday Office Closure - Labor Day

In observance of the Labor Day Holiday, tys, llp offices will close at 12:00pm on Friday, September 2 2011.


We will re-open Tuesday, September 6, 2011.

Please have a safe and happy holiday!

Applicable Federal Rates (AFRs) for September 2011

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


Annual
Semiannual
Quarterly
Monthly
Short-term (≤ 3 years)
0.35%
0.35%
0.35%
0.35%
Mid-term (> 3 years but ≤ 9 years)
1.47%
1.46%
1.46%
1.46%
Long-term (> 9 years)
3.77%
3.74%
3.72%
3.71%

Tuesday, August 2, 2011

Applicable Federal Rates (AFRs) for August 2011

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


Annual
Semiannual
Quarterly
Monthly
Short-term (≤ 3 years)
0.32%
0.32%
0.32%
0.32%
Mid-term (>;3 years but ≤ 9 years)
1.90%
1.89%
1.89%
1.88%
Long-term (>; 9 years)
3.86%
3.82%
3.80%
3.79%