NOVEMBER//19// 2014

2014 RICHMOND YEAR END

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AGENDA

Welcome/Activity on year-end tasks

Latest Updates

Break

Latest Updates (Continued)

Lunch

Employee or Contractor—Find the mistakes

Case Studies: You Be The Judge

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AGENDA

Relocation

Employer-Provided Meals

Break

27 Paychecks

Taxable Fringe Benefits

Record Retention Issues

Saving Social Security

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LATEST >>>>>>>>>>>>>UPDATES

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TOPICS

Important 2015 Numbers

Unemployment Insurance

Payroll and employer “shared responsibility” obligations

Wage and Hour Changes

Mobile Workforce

Same-Sex Marriage

Other Payroll Issues

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IMPORTANT >>>>>>>>>>>>>2015 NUMBERS

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2015 NUMBERSSocial Security (OASDI) Wage Base is $118,500Deferred Compensation Limits

Employee deferred comp limit is $18,000 (Catch up is $6,000)

Defined contribution limit is $53,000Internal Revenue Code Section 1.61-21(f)(5)(iii)limit is

$215,000 and the general annual qualified plan compensation limit is $265,000

Qualified Transportation Fringes: $250 a month parking/ $130 public

transportation/van poolsForeign-Earned Income Exclusion: $100,800

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2015 NUMBERSHealth FSA Limit: $2,550HSA Limits: Max Contributions $3,350 single/$6,650 family

HDHP Deductibles: $1,300/$2,600 Out-of-Pocket: $6,450/$12,900

Adoption Credit/Expense: $13,400Standard Deduction: $6,300/Personal Allowance amount: $4,000FUTA Credit Reduction: 12 states and the U.S. Virgin Islands--VA

okay; DE, NC not okayCents-Per-Mile: ?

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UNEMPLOYMENT >>>>>>>>>>>>>INSURANCE

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UNEMPLOYMENT INSURANCEAS OF NOV. 7, STATES OWE MORE THAN $13B TO FEDS (SOURCE: US DOL)

Arizona $ 29,939,342.18 California* $ 7,994,021,174.73 Connecticut * * $ 432,497,697.51 Indiana * $ 845,292,214.19 Kentucky* $ 334,666,264.78 New York* $ 1,196,147,816.64 North Carolina* $ 464,952,016.40 Ohio* $ 1,379,323,254.14 South Carolina $ 270,490,526.64 Virgin Islands $ 76,898,491.57 Total $13,024,228,798.78

*FUTA Credit Reduction state for 2014 (Indiana 1.5%, all others 1.2%)**FUTA and BCR add-on applies for Connecticut—poss. $119 extra/employee in 2014

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UNEMPLOYMENT INSURANCE

Who pays? Employers in those states

States with 2014 credit reductions/BCR add-ons

Virginia NOT a credit reduction state for 2014

N.C. IS a credit reduction state for 2014

Connecticut is first state to have BCR add-onWhat is a BCR add-on?

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UNEMPLOYMENT INSURANCE

Requirements to respond to states (UI integrity)

ERs fail to respond to state inquiries timely

Results in disqualification SIDES (State Information Data Exchange System)

Allows more efficient response to state requests

More timely response helps reduce unnecessary benefits

VA coming on board (March 2015 big implementation)

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UNEMPLOYMENT INSURANCEFEDERAL INITIATIVES:

Requirement for integrity program (instituted)

Grants to states for worker misclassification identification initiatives

Grants to states for job placement assistance programs

DOL pushing SIDES implementation

$15,000/year wage base proposal/Reduce rate to compensate

Relief to credit reduction states

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PAYROLL AND >>>>>>>>>>>>>SHARED RESPONSIBILITY

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PAYROLL AND ‘SHARED RESPONSIBILITY’

For 2015 penalties apply when LARGE employers:

Do not offer health coverage or covers < 95% of FT & dependents

Offer health coverage ≥ 95% of FT employees but not affordable or not minimum value

≥ 1 employee receives premium tax credit

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Mid-size employers (50-99 FTE)

Not subject to penalty until 2016

Maintain or do not reduce coverage

Keep coverage as of 2/9/14

Cannot fire EEs to get below 100

PAYROLL AND ‘SHARED RESPONSIBILITY’

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PAYROLL AND ‘SHARED RESPONSIBILITY’

How much responsibility will payroll share?Figuring full time employment for two reasons:

• To determine if employer is covered• To determine if employee should be offered coverage

Determining affordability--9.5 percent single(three “safe harbors”):

• W-2 wages• Rate of pay• Federal poverty level ($92.39)

Employer reporting requirements:• W-2 reporting of cost of health care (already in place)• Shared responsibility information reporting

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Information reporting delayed until 2015

Voluntary for 2014

Mandatory - 1/2015

Section 6056 requires reporting of:ERs ≥ 50 FTEs

Info to IRS & EEs No Box 12 effect

PAYROLL AND ‘SHARED RESPONSIBILITY’

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Form 1095-C EE and IRS: Similar to W-2

Form 1094-C IRS Transmittal: Similar to W-3 Filed to employee last day of Jan. IRS no later than 2/28; 3/31 if filed

electronically First returns for 2015 – due to employees

2/1/16; to IRS 2/29/16

(Also 1095-B Form)

PAYROLL AND ‘SHARED RESPONSIBILITY’

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PAYROLL AND ‘SHARED RESPONSIBILITY’

Conflicting Federal Appeals Court Decisions

Availability of tax credits to buy coverage Halbig (DC) - subsidies only available thru state exchanges

King (4th) - subsidies can come from federal exchange acting as state exchange

What does this mean to employers? Penalty triggered when employee receives subsidy from exchange where employee

lives, not where employee works DC case means employers exposure to penalties would depend on:

• Where employee resides• Whether federal or state exchange operates there

Supreme Court agrees to hear arguments

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WAGE AND HOUR >>>>>>>>>>>>>FED AND STATE ISSUES

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Wage and Hour initiatives proliferate:

Federal contractor minimum wage increases

Overhaul of FLSA overtime regulations

Coverage expanded (domestic workers) Enforcement

delayed until July 2015!

Enforcement overall is increasing

WAGE AND HOUR ISSUES--FEDERAL

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WAGE AND HOUR ISSUES--STATE

Minimum wage on ballot in five states:

All five measures passed (Ill. was

nonbinding)

Now 14 states and D.C. enacted min

wage increases in 2014

Local minimum wages also enacted

Benefit requirements

Va. conforms to federal

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THE MOBILE >>>>>>>>>>>>>WORKFORCE

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THE MOBILE WORKFORCE

Affects ERs

Nonresident state income tax withholding

Register and withhold

Affects EEs

Multiple state tax returns

Selective enforcement

States with no income tax

Compliance is difficult (Impossible?)

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THE MOBILE WORKFORCE

Colorado Info LetterGIL-14-015 - Issued in summer

Clarifies one-day threshold for withholding purposes

Less than one day - withholding not required

At least one day or more - withholding required

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THE MOBILE WORKFORCE

Virginia law/policy:• Form VA-4B can relieve double withholding• Commuters from DC, Ky., Md., Pa., and W.V.• Nexus is created through Va. teleworker

States adopting tax-free status for disaster-related workers

• Nothing yet for Va.

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THE MOBILE WORKFORCE

Mobile Workforce bill (H.R. 1129, S. 1645)

EEs traveling/working out of state subject to taxation

30-day threshold before state can tax nonresidents

Athletes & public figures not protected

States resistant, cite state sovereignty/NY could lose $$

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THE MOBILE WORKFORCE

MULTISTATE TAX COMMISSION MODELFlat 20-day work threshold before subject to state's

income tax

Exceptions include: construction workers, athletes, performers

North Dakota adopted this modelOnly state so far & only applies if another state adopts

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SAME SEX >>>>>>>>>>>>>MARRIAGE AND PAYROLL

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SAME SEX MARRIAGE AND PAYROLL

Oct. 6 – SUPREME COURT CHOOSES NOT TO HEAR LOWER COURT CASES ALLOWING SAME-SEX MARRIAGES

5 states’ rulings (IN, OK, VA, UT, WI)

VA - tax applies equally to for legally-married same-sex spouses as opposite-sex spouses

MD, DC - already allowed; NC, WV now allow (as of Oct.) Nov. 6: Sixth Circuit upholds states’ right to determine marriage

• Case likely to Supreme Court >>>>

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OTHER ISSUES >>>>>>>>>>>>>FOR 2015

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OTHER PAYROLL ISSUES

Third-Party Sick Pay• New recap form, Form 8922, now available for 2014 filing

Payroll Debit Cards—state developments• Va. pretty lenient

Child support and garnishments• New IWO Form to be used by states• Push for uniform garnishment guidelines• Student loan collection issue

Regulating payroll service providers • More transparency required• EFTPS inquiry PINS

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OTHER PAYROLL ISSUES

SSA eliminates tolerance for incorrect filing formats, etc. • W-2 files to be rejected without being accepted as timely filed• Uploading routine will screen for errors• Accuwage software more important

Employment Tax Survey• IRS asking employers about burden• 10,000 employers sent survey from IRS in Fall• Voluntary

Other Supreme Court cases• Compensable Time• Credit for local taxes

Worker Status!!!—After Lunch

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Michael BaerManaging EditorBloomberg BNA703.341.3801mbaer@bna.com@MichaelTBaer (Twitter)

Thank you Richmond Chapter!