January 2010
How can CPA Care Help?
Important Dates
As your clients receive their 2010 state
unemployment insurance contribution
rates, please forward them to your CPA
Care Advocate so their accounts can be
updated to reflect the new rate as soon
as possible.
January 1 - Everyone. Federal Holiday
(New Year’s Day).
January 15 - Paycor Clients. Last date to
report third party sick pay and COBRA
credit adjustments.
January 18 - Everyone. Federal Holiday
(Birthday of Martin Luther King, Jr.).
For more information contact:
Paycor Voted A 2009 Best
Place to Work
This recognition is especially important
to me because these awards were based
on surveys filled out by our associates.
Knowing that our associates are engaged in
our success means that our clients and the
community will continue to benefit from our
service.
- Bob Coughlin, Paycor CEO
Michigan was unable to repay its outstanding loans for unemployment insurance by
November 10, 2009, causing them to incur a 0.3% reduction in their Federal Unemployment
Tax Act (FUTA) tax credit. Although no other states will be credit reduction states for 2009,
the high loan balances of Indiana and South Carolina mean they may be in 2010, and 21
other states (plus the Virgin Islands) have balances for loans taken out in 2009 making them
potential credit reduction states for 2011.
Credit reductions because of state loans
January 22 - Paycor Clients. All
employee W-2s will be shipped by this
day.
CPA Care Advocate
513.719.1300
866.729.2671
[email protected]
Actions Being Taken to Ensure States Can Repay Federal
Loans Issued for Unemployment Insurance
Did you know?
Paycor understands year end is a stressful time, that’s why we make
every effort to print employees’ W-2s correctly the first time. Please call
your CPA Care Advocate if you need to request additional copies of
employer W-2s, W-2c’s or W-3c’s.
Deadline for Third-Party Sick Pay is January 15
Third-party sick pay payments can be entered into Paycor’s payroll
application at any time during the year, but many times payment
information may not be received until year-end. By law, providers must
report payment info by January 15, 2010.
Prior to processing the third-party sick pay payments, please consider
the following questions:
• What employees received a disability payment from a third-party
insurance company?
• What are the total annual disability payment amounts and taxes
withheld by the third-party insurance company for each employee?
• Should we include the disability payment amount on each
employee’s W-2?
At Paycor, we take pride in ensuring
we are well informed on current
events so we can proactively service
our clients. When Paycor received
the notification that Michigan
would indeed have a FUTA credit
reduction, we immediately took the
initiative to ensure all of our clients
were in compliance by processing
an additional adjustment run to the
clients’ accounts.
- Arlene Baker
Trainer, Paycor
Under the joint federal/state unemployment insurance system, states with a high rate of
unemployment and difficulty meeting their benefit obligations can borrow money from the
Federal Unemployment Account to pay benefits. If loans taken out during one year are not
repaid by the end of the following calendar year, the credit taken by employers against FUTA
tax for paying state unemployment insurance taxes on time is reduced. The extra FUTA taxes
paid are then applied against the state’s loan balance.
A state with an outstanding loan can avoid a credit reduction for its employers by repaying
the loan by November 10 of the year the reduction is scheduled to take effect. If the loan is
not repaid by that date, a credit reduction of 0.3% goes into effect, with employers in that
state having their effective FUTA tax rate increased to 1.1% (0.8% + 0.3%). The extra 0.3% in
FUTA taxes means that employers will have to pay an extra $21 per employee (0.3% up to the
federal wage base of $7,000), for a total of $77 per employee.
The more years the loan remains unpaid, the greater the credit reduction becomes (subject
to certain limits). There is an additional 0.3% credit reduction for each succeeding year that
outstanding federal loans remain unpaid. For example, if Michigan is again a credit reduction
state for 2010, a credit reduction of 0.6% would go into effect, with employers in that state
having their effective FUTA tax rate increased to 1.4% (0.8% + 0.6%).
Many states have outstanding FUTA loan balances
With the recession and high unemployment continuing in 2009, unemployment insurance
trust funds in many states have been drained. The Department of Labor reports that the
number of states with outstanding loans has grown to 25, as of November 20. Unless these
loans are repaid, there will be more credit reduction states in the coming years. To address
the situation, some states are passing legislation to increase their taxable unemployment
insurance wage base or tie the wage base increases to the balance in the state unemployment
insurance trust fund. States may also find it necessary to raise employers’ unemployment
insurance contribution rates or add further surcharges to raise revenue to pay benefits and
pay off their loan balances.
January 2010
Frequently Asked Questions about the COBRA Subsidy
Under the American Recovery and Reinvestment Act of 2009, employers are required to
provide a 65 percent subsidy to assistance-eligible individuals for their COBRA health
coverage premium.
How will employers be reimbursed for the COBRA subsidy?
The COBRA subsidy amount is reimbursed by being claimed as a credit on Form 941,
Employer’s Quarterly Federal Tax Return. The credit is claimed on Line 12a and the number of
individuals who received COBRA premium assistance should be recorded on Line 12b.
When can an employer claim the COBRA subsidy credit?
How can CPA Care Help?
Contact your CPA Care Advocate to
obtain a COBRA Credit Report that
details individual employees who
have elected COBRA health insurance,
as well as monthly and quarterly
amounts the employer has paid in
premiums. COBRA credit adjustments
must be reported to Paycor by January
15, 2010.
An employer may claim its credit on the 941 for the quarter in which the employee enjoyed
the assistance or any later quarter in the same calendar year. In addition, the employer may
not claim the credit until the employee has paid his or her share of the premium. According
to recent IRS communications, it may be necessary for some employers to file an amendment
to their 941 for the fourth quarter 2009.
What other information relating to the COBRA subsidy must be maintained?
Those claiming the credit must maintain supporting documentation for the credit claimed.
Such documentation includes:
• Information on the receipt, including dates and amounts, of the individuals’ 35 percent
share of the premium.
• Proof of the premium amount and proof of timely payment of the full premium.
• Attestation of involuntary termination, including the date (which must be between
9/1/2008 and 12/31/2009), proof of each individual’s eligibility for and election of COBRA
coverage.
• A record of the social security numbers of all covered employees, the amount of the
subsidy reimbursed with respect to each covered employee and whether the subsidy was
for one individual or two or more individuals.
Are there other means for employers to claim the COBRA subsidy credit?
An employer may reduce its payroll tax deposits during a quarter by the amount of subsidy
provided during the quarter. However, in all cases, credit for the subsidy must be claimed on
the employer’s payroll tax return.
For more information, search COBRA at www.irs.gov.
Valuing Personal Use of a
Company Vehicle
Use of a company-owned or companyleased vehicle is a common fringe
benefit provided by employers. More
than minimal non-business-related
use of a company car by an employee
– including commuting to and from
work – is considered personal use. An
employee’s personal use of a vehicle
paid for by the employer is generally
subject to federal, state, social security,
Medicare and local withholding.
Cents-Per-Mile Method
For this calculation, the IRS’s 2010
standard business mileage rate of 50
cents is multiplied by the personal miles
driven by the employee. For vehicles
put into service in 2010, this valuation
method can only be used if the fair
market value is under $15,300 for cars
and $16,000 for passenger trucks or
vans.
Lease Value Rule
Under this rule, the value of the vehicle
provided to the employee is determined
by using its annual lease value. If the
automobile is used by the employee
for business, the lease value is generally
reduced by the amount that would
be an allowable business expense
deduction for the employee if the
employee paid for the use of the vehicle.
For more information and to view the
Annual Lease Value Table, search Pub 15-B
at www.irs.gov.
For Nonprofits, Every Penny Matters
Let Paycor help you account for them.
Full-time employees, part-time and seasonal help, independent contractors—most
nonprofits rely on a variety of resources to deliver their programs and services. As
a CPA who supports clients in the nonprofit sector, you know at the end of the day
every penny must be accounted for. That’s why Paycor developed a payroll package
for nonprofits that reduces hassles and risks while giving you—and your clients—
control and flexibility. Through this nonprofit package, you and your clients will
have the ability to generate a detailed labor analysis report broken out by grant, an
interface of payroll hours into our Internet Entry system and a customized general
ledger, all aimed to assist you with grant and fund accounting.
Refer clients through our “Share the Care” program.
Do you have nonprofit clients who could benefit from Paycor’s expertise? Make
a “Share the Care” referral by calling your Paycor Account Manager or CPA Care
Advocate. Each nonprofit that agrees to meet with a Paycor Account Manager before
January 29, 2010 will receive a $25 donation to their organization! In addition, as a
token of our appreciation, we’ll reserve a copy of the 2009 Tax Year Quickfinder Guide
for you when your client chooses Paycor.
January 2010
How can CPA Care Help?
Important Dates
As your clients receive their 2010 state
unemployment insurance contribution
rates, please forward them to your CPA
Care Advocate so their accounts can be
updated to reflect the new rate as soon
as possible.
January 1 - Everyone. Federal Holiday
(New Year’s Day).
January 15 - Paycor Clients. Last date to
report third party sick pay and COBRA
credit adjustments.
January 18 - Everyone. Federal Holiday
(Birthday of Martin Luther King, Jr.).
For more information contact:
Paycor Voted A 2009 Best
Place to Work
This recognition is especially important
to me because these awards were based
on surveys filled out by our associates.
Knowing that our associates are engaged in
our success means that our clients and the
community will continue to benefit from our
service.
- Bob Coughlin, Paycor CEO
Michigan was unable to repay its outstanding loans for unemployment insurance by
November 10, 2009, causing them to incur a 0.3% reduction in their Federal Unemployment
Tax Act (FUTA) tax credit. Although no other states will be credit reduction states for 2009,
the high loan balances of Indiana and South Carolina mean they may be in 2010, and 21
other states (plus the Virgin Islands) have balances for loans taken out in 2009 making them
potential credit reduction states for 2011.
Credit reductions because of state loans
January 22 - Paycor Clients. All
employee W-2s will be shipped by this
day.
CPA Care Advocate
513.719.1300
866.729.2671
[email protected]
Actions Being Taken to Ensure States Can Repay Federal
Loans Issued for Unemployment Insurance
Did you know?
Paycor understands year end is a stressful time, that’s why we make
every effort to print employees’ W-2s correctly the first time. Please call
your CPA Care Advocate if you need to request additional copies of
employer W-2s, W-2c’s or W-3c’s.
Deadline for Third-Party Sick Pay is January 15
Third-party sick pay payments can be entered into Paycor’s payroll
application at any time during the year, but many times payment
information may not be received until year-end. By law, providers must
report payment info by January 15, 2010.
Prior to processing the third-party sick pay payments, please consider
the following questions:
• What employees received a disability payment from a third-party
insurance company?
• What are the total annual disability payment amounts and taxes
withheld by the third-party insurance company for each employee?
• Should we include the disability payment amount on each
employee’s W-2?
At Paycor, we take pride in ensuring
we are well informed on current
events so we can proactively service
our clients. When Paycor received
the notification that Michigan
would indeed have a FUTA credit
reduction, we immediately took the
initiative to ensure all of our clients
were in compliance by processing
an additional adjustment run to the
clients’ accounts.
- Arlene Baker
Trainer, Paycor
Under the joint federal/state unemployment insurance system, states with a high rate of
unemployment and difficulty meeting their benefit obligations can borrow money from the
Federal Unemployment Account to pay benefits. If loans taken out during one year are not
repaid by the end of the following calendar year, the credit taken by employers against FUTA
tax for paying state unemployment insurance taxes on time is reduced. The extra FUTA taxes
paid are then applied against the state’s loan balance.
A state with an outstanding loan can avoid a credit reduction for its employers by repaying
the loan by November 10 of the year the reduction is scheduled to take effect. If the loan is
not repaid by that date, a credit reduction of 0.3% goes into effect, with employers in that
state having their effective FUTA tax rate increased to 1.1% (0.8% + 0.3%). The extra 0.3% in
FUTA taxes means that employers will have to pay an extra $21 per employee (0.3% up to the
federal wage base of $7,000), for a total of $77 per employee.
The more years the loan remains unpaid, the greater the credit reduction becomes (subject
to certain limits). There is an additional 0.3% credit reduction for each succeeding year that
outstanding federal loans remain unpaid. For example, if Michigan is again a credit reduction
state for 2010, a credit reduction of 0.6% would go into effect, with employers in that state
having their effective FUTA tax rate increased to 1.4% (0.8% + 0.6%).
Many states have outstanding FUTA loan balances
With the recession and high unemployment continuing in 2009, unemployment insurance
trust funds in many states have been drained. The Department of Labor reports that the
number of states with outstanding loans has grown to 25, as of November 20. Unless these
loans are repaid, there will be more credit reduction states in the coming years. To address
the situation, some states are passing legislation to increase their taxable unemployment
insurance wage base or tie the wage base increases to the balance in the state unemployment
insurance trust fund. States may also find it necessary to raise employers’ unemployment
insurance contribution rates or add further surcharges to raise revenue to pay benefits and
pay off their loan balances.