Payroll & Business Experts Blog

The U.S. Department of Health and Human Services (HHS) issued a bulletin on December 16, 2011 which outlines proposed policies that will give states more flexibility and freedom to implement the Affordable Care Act.  States will be given wide latitude to decide what “essential benefits” insurers must offer in their health policies come 2014.  HHS intends to propose that items and services required to be covered as "essential health benefits" be defined by an existing benchmark health insurance plan to be selected by each state.

In the article, HHS Gives States Flexibility on Health Law’s ‘Essential Benefits’, Kaiser Health News says “The guidance may well please states, which wanted maximum flexibility, but it disappointed some patient advocates.  And it continues the uncertainty faced by insurers, consumers and employers over exactly what will be covered in the essential benefit package.”

The IRS announced that taxpayers will have until April 17th to file their 2011 tax returns.  The IRS encourages taxpayers to e-file as it is the best way to ensure accurate tax returns and get faster refunds.  The IRS expects to receive more than 144 million individual tax returns this year, with most of those being filed by the April 17th deadline.

Taxpayers will have until Tuesday, April 17, to file their 2011 tax returns and pay any tax due because April 15 falls on a Sunday, and Emancipation Day, a holiday observed in the District of Columbia, falls this year on Monday, April 16.  According to Federal law, District of Columbia holidays impact tax deadlines in the same way that Federal holidays do; therefore, all taxpayers will have two extra days to file this year.  Taxpayers requesting an extension will have until October 15th to file their 2012 tax returns.

The following is a guest blog post by Marci Gott, Manager, Operations Support & Compliance at PrimePay.

Eight states have raised their minimum wage rates for 2012.  Minimum wage rates in Arizona, Colorado, Florida, Montana, Ohio, Oregon, Vermont and Washington rose between 28 and 37 cents per hour effective January 1, 2012.  Rates in these states will range from $7.64 per hour in Colorado to $9.04 in Washington in 2012.  Washington state, which has the highest rate in the country, will become the first state whose minimum wage rate will go above $9.00 per hour.

The hiring outlook for 2012 remains cautiously optimistic.  Employers expect to add new jobs in 2012, but are waiting to see how the economy shapes up before turning up the volume on hiring, according to the recent nationwide survey by CareerBuilder. 

Nearly one-in-four hiring managers plan to hire full-time, permanent employees in 2012, similar to 2011.  Employment trends among small businesses, which account for the majority of job creation in the U.S., are expected to show some improvement over last year.

The Internal Revenue Service (IRS) has issued new interim guidance, updating and replacing information previously released, on the requirement under the Affordable Care Act that employers report the value of the health insurance coverage they provide employees on each employee's annual Form W-2.

The Affordable Care Act requires employers to report the cost of coverage under an employer-sponsored group health plan on employees' W-2s.  The purpose of the new reporting is to inform employees of the cost of their health coverage.  Employer-provided health coverage continues to be excludable from an employee's income and the amount reported is not taxable for Federal income tax purposes.*

In case you missed these posts during 2011, here is a list of our top 10 most viewed blog articles from last year.  Our most popular article… FUTA (Federal Unemployment) Rate to Change July 1, 2011… was viewed over 11,000 times in just six months.  Thanks to everyone that subscribes to our Payroll & Business Experts Blog!  We’re glad you find these articles useful and pertinent to your business. 

The Internal Revenue Service (IRS) released the 2012 optional standard mileage rates that employees, self-employed individuals and other taxpayers use to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.  For the most part, they have not changed much since the 2011 mid-year adjustment.

Our news briefs contain bits of information released from Federal and state government agencies which will help you stay current on changes that could directly impact your business.  News Brief #5 focuses on the postponement of the effective date for the NLRB employee rights notice, Colorado and Vermont state minimum wage increases for 2012 and information on the new 2012 paid sick leave law for Connecticut.

Nearly 160 million workers will benefit from the extension of the reduced payroll tax rate that has been in effect for 2011.  The 4.2% rate for the employee portion of the Social Security payroll tax has been extended through February 29, 2012.  On December 23rd, President Obama signed into law the Temporary Payroll Tax Cut Continuation Act of 2011 (H.R. 3765).  Based on this new legislation, wages earned after December 31, 2011 and before March 1, 2012 will be subject to the 4.2% Social Security Old Age, Survivors, and Disability Insurance (OASDI) withholding rate up to the full Social Security wage base of $110,100.  This reduced Social Security withholding will have no effect on employees’ future Social Security benefits.  Employers will still pay the full 6.2% rate for their portion of the Social Security tax.

Twenty states have a Federal Unemployment Tax Act (FUTA) credit reduction for 2011.  Employers in a credit reduction state must remember to calculate a credit reduction as an adjustment to their FUTA tax on their 2011 IRS Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return.  Credit reduction states are states that did not repay the money they borrowed from the Federal government to pay unemployment benefits.  Employers must include liabilities owed for credit reduction in calculating their fourth quarter deposit.