Covered Employers

The law applies to companies with 50 or more employees that do not already offer at least five paid days off for full-time workers.

Covered Employees

The law defines service workers as individuals employed in dozens of specific occupations defined by the federal Bureau of Labor Statistics Standard Occupational Classification system, who are paid on an hourly basis and not exempt from the Fair Labor Standards Act of 1938's minimum wage and overtime requirements. It requires companies to give full-time workers covered by the law 40 hours of paid sick leave per year, accrued on a weekly basis. Individuals eligible for paid sick leave include certain specified hourly service employees who worked at least 520 hours within the 12 months preceding the request for leave. Day or temporary workers are not eligible for sick leave benefits. Examples of some of the 68 different categories of eligible hourly service workers include food service managers, dental assistants, fast food workers, medical assistants, waiters, child care workers, data entry and information processing workers, and retail salespersons. Several types of workers are exempt, including manufacturing workers, salaried employees, temporary workers and workers at nationally chartered nonprofit organizations. The law allows employees to file complaints with the Connecticut Department of Labor, but not private lawsuits.

Notice requirements

Connecticut employers will be required, as of January 1, 2012, to provide notice, at the time of hiring, regarding the entitlement to sick leave, and to specifically advise eligible employees that employers are prohibited from retaliating against them. Employers may comply with their notice obligations by posting a notice in a conspicuous location incorporating these requirements. Click here for link to Poster.

Anti-Retaliation Provision

Beginning on Jan. 1, 2012, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

• 55.5 cents per mile for business miles driven
• 23 cents per mile driven for medical or moving purposes
• 14 cents per mile driven in service of charitable organizations

The rate for business miles driven is unchanged from the mid-year adjustment that became effective on July 1, 2011. The medical and moving rate has been reduced by 0.5 cents per mile.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs as determined by the same study. Independent contractor Runzheimer International conducted the study.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.

These and other requirements for a taxpayer to use a standard mileage rate to calculate the amount of a deductible business, moving, medical or charitable expense are in Rev. Proc. 2010-51.

Notice 2012-01 contains the standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan.

Certain payroll withholding tax calculations, including those being made to state employees within their own payroll processing system, are not being processed accurately.

Despite the payroll processing problem, Commissioner of Revenue Services Kevin Sullivan advised affected taxpayers that they can protect themselves from the risk of underpayment. Taxpayers may make estimated payments in order to assure that enough tax is paid to meet the “safe harbor” of paying in at least as much as the amount of their last annual Connecticut income tax due.

Said Commissioner Sullivan, “Taxpayers will rightfully ask whether they may be subject to interest and penalty because of underwithholding due to this problem. I want to assure taxpayers who find themselves in this situation that they will not be subject to interest or penalty on such underpaid amounts. Similarly, employers who in good faith and solely due to this problem do not correctly withhold and pay in the taxes due for their employees will not be penalized in the event of audit.”

Link to the full article from CT DOR: http://www.ct.gov/drs/cwp/view.asp?a=1436&Q=484454

DRS Commissioner Kevin B. Sullivan noted that the impact of the tax increases for low and medium income earners is relatively minor. Many taxpayers will see no change in their withholding or estimated payments.

Link to the full article and income tax withholding tables.

http://www.ct.gov/drs/cwp/view.asp?A=1436&Q=479580

The rate will increase to 55.5 cents a mile for all business miles driven from July 1, 2011, through Dec. 31, 2011. This is an increase of 4.5 cents from the 51 cent rate in effect for the first six months of 2011, as set forth in Revenue Procedure 2010-51.
In recognition of recent gasoline price increases, the IRS made this special adjustment for the final months of 2011. The IRS normally updates the mileage rates once a year in the fall for the next calendar year.

"This year's increased gas prices are having a major impact on individual Americans. The IRS is adjusting the standard mileage rates to better reflect the recent increase in gas prices," said IRS Commissioner Doug Shulman. "We are taking this step so the reimbursement rate will be fair to taxpayers."

While gasoline is a significant factor in the mileage figure, other items enter into the calculation of mileage rates, such as depreciation and insurance and other fixed and variable costs.

The optional business standard mileage rate is used to compute the deductible costs of operating an automobile for business use in lieu of tracking actual costs. This rate is also used as a benchmark by the federal government and many businesses to reimburse their employees for mileage.

The new six-month rate for computing deductible medical or moving expenses will also increase by 4.5 cents to 23.5 cents a mile, up from 19 cents for the first six months of 2011. The rate for providing services for charitable organizations is set by statute, not the IRS, and remains at 14 cents a mile.

The new rates are contained in Announcement 2011-40 on the optional standard mileage rates.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

The House voted unanimously on Wednesday, February 16 to freeze the state’s unemployment insurance rate, a measure which will eliminate a potential $228-per-employee increase on employers in the Bay State. The bill headed to the House last week when it passed 36-0 in the Massachusetts Senate. The freeze aims to encourage hiring and reduce the adverse effects of the scheduled assessment on struggling businesses.

Despite this measure, employers will still see a 10 percent increase, which figures to about $61 per employee, due to the formula that takes into account the overall level of unemployment.

Benefit payments over the first 11 months of 2010 were 32 percent lower than the comparable period in 2009, and through the end of November 2010 initial claims were down 23.4 percent compared to the same period in 2009.

Massachusetts lawmakers became convinced that the state could afford to limit the rate increase following numbers that suggested a drastic turnaround in the Unemployment Insurance Trust Fund balance, which went from a $303 million deficit in December to a $12.7 million surplus by the end of last month.

The debate over income tax extensions has been well publicized and, while Congress is likely to approve the extensions in some form, there appears to be disagreement between Congress and the White House on the issue. That disagreement is certain to hold up the tax legislation. We are now hearing the issue is not likely to be resolved until as late as mid-December.

The Treasury Department and IRS are aware of the problem and will be ready to turn the withholding tables around quickly, but it will be a challenge for the government and the payroll industry.  

Current scams and phishing sites posing as the IRS

A similar rule goes into effect on Jan. 1, 2011 for Health Savings Accounts (HSAs), and Archer Medical Savings Accounts (Archer MSAs).

Employers and employees should take these changes into account as they make health benefit decisions for 2011.

For Questions and Answers Regarding "Over-The Counter" Medicines and Drugs See Link Below
http://www.irs.gov/newsroom/article/0,,id=227308,00.html

The Small Business Health Care Tax Credit is designed to help small businesses and small tax- exempt organizations to afford the cost of covering their employees health insurance.


Simple Eligibility Rules are as follows:

1. Providing health care coverage. A qualifying employer must cover at least 50 percent of the cost of health care coverage for some of its workers based on the single rate.
2. Firm size. A qualifying employer must have less than the equivalent of 25 full-time workers (for example, an employer with fewer than 50 half-time workers may be eligible).
3. Average annual wage. A qualifying employer must pay average annual wages below $50,000.
4. Both taxable (for profit) and tax-exempt firms qualify.

Follow this link and use the Worksheet to help determine if you qualify.

http://www.irs.gov/pub/irs-utl/3_simple_steps.pdf

The Amount of Credit Available:

• Maximum Amount. The credit is worth up to 35 percent of a small business' premium costs in 2010. On Jan. 1, 2014, this rate increases to 50 percent (35 percent for tax-exempt employers).
• Phase-out. The credit phases out gradually for firms with average wages between $25,000 and $50,000 and for firms with the equivalent of between 10 and 25 full-time workers. 

New guidance has been recently issued to make it easier for small businesses to determine whether they are eligible for the new health care tax credit under the Affordable Care Act and how large a credit they will receive.

http://www.irs.gov/newsroom/article/0,,id=223577,00.html

There are two key payroll tax credits that you should be aware of:

FICA Exemption

Employers will be exempt from paying the Employer share of Social Security taxes on wages paid to qualified unemployed workers after the date of enactment (3/18/2010) and before January 1, 2011. This exemption does not apply to Medicare taxes, nor does it exempt the employee from having to pay Social Security taxes on those same wages.

This exemption has no cap or limit as to the total amount of tax benefits that can be claimed by an employer. The Social Security wage tax of 6.2% on the max of $106,800.00 would save the Employer $6,621.60 in 2010.

Eligible new hires are defined as follows:

• Begins employment with the employer after February 3, 2010 and before January 1, 2011,
• Certifies by signed affidavit, under penalties of perjury, that he has not been employed for more than 40 hours during the 60-day period ending on the date he begins employment with the employer,
• Is not employed by the employer to replace another employee of the employer unless the other employee separated from employment voluntarily or for cause, and
• Is not related to a greater-than-fifty percent owner of the employer.

(The legislation does not address how the employer would establish that the new hire was not to replace another employee or that the termination of the other employee was voluntary or for cause.)

Retention Tax Credit

To provide incentive to retain these newly hired employees, employers will receive a general business credit of $1,000 for each qualifying employee that satisfies a minimum employment period. A qualifying employee is based on the same definition used for the FICA exemption discussed above. In addition, the employee must:

• Be employed by the employer on any date during the taxable year,
• Be employed continuously by the employer for at least 52 weeks from the hire date, and
• Receive compensation during the last 26 weeks of the period that is at least 80 percent of the compensation paid during the first 26 weeks of the period.

Essentially, a calendar year employer will receive the tax credit in 2011 if the qualifying employee is retained for at least one year from date of hire and if the compensation is fairly stable during the first year. The 80 percent rule was put in place presumably to prevent employers from front loading wages into 2010 when they would be eligible for the payroll tax holiday.

CheckWriters Will Help With The FICA Exemption

We are making adjustments within our software to facilitate your reporting of the newly hired employees that will qualify for the exemption. If you have a qualifying Employee, please call your Customer Service Representative at CheckWriters. We will set up the proper tax code for you to add to each qualifying employee's tax tab.

The applicable tax will be an actual reduction to your payroll tax liability amount. Payroll Tax Transfers, Liabilities and Deposits will reflect the reduction.

Please be aware that you, as the Employer, must certify by affidavit that the employee meets the qualifications under the HIRE ACT.

For the IRS information page please click below.

http://www.irs.gov/newsroom/article/0,,id=220326,00.html

 These new regulations represent a new phase in efforts by states to combat identity theft. While these regulations apply only to organizations with Massachusetts employees, even organizations without a Massachusetts presence should consider implementing a similar program. Although several states currently have their own statutes regarding personal information protection, the MA regulations likely will be a model for other jurisdictions and could become the standard against which all information security programs are measured.

 CheckWriters Payroll has always employed a series of security controls to protect the personal information of Clients. These controls are regularly tested as part of our SAS70 Type II audit. We have also developed a Comprehensive Written Information Security Policy that specifically addresses our obligations under MA 201 CMR 17.00.

 The MA regulations require that organizations (our Clients), obtain a written certification from each vendor that receives personal information of a Massachusetts resident. The certification should be a stand-alone document and must state that the vendor (CheckWriters) has a written, comprehensive information security program in compliance with MA "Standards for the Protection of Personal Information of Residents of the Commonwealth."

 As a convenience to you, and to ensure your compliance with the provisions of MA 201 CMR 17.00, please click on the link below to download our THIRD PARTY PERSONAL INFORMATION PROTECTION AGREEMENT. You should apply your legal Company name where applicable, sign and date the document. This agreement should be attached to your written information security plan.

Click here to access CheckWriters Payroll THIRD PARTY PERSONAL INFORMATION PROTECTION AGREEMENT

In the event that you receive any payroll tax notice from the IRS, please forward immediately to our payroll tax department. We will follow up with the IRS to insure filing accuracy.

Click here to view latest correspondance from the IRS.

This action would affect more than 35 million Americans who use employer-sponsored benefit programs like flex spending accounts to help pay for medical, dental and vision expenses.

Click below to read more and tell Congress to expand the FSA program rather than limit or tax our health care expenses.  http://www.savemyflexplan.org/

 New language in the regulations recognizes that the size of a business and the amount of personal information it handles plays a role in the data security plan the business creates. The new language requires safeguards that are appropriate to the size, scope and type of business handling the information; the amount of resources available to the business; the amount of stored data; and the need for security and confidentiality of both consumer and employee information.

 For more information about identity theft protection, visit the Office of Consumer Affairs and Business Regulation website, www.mass.gov/consumer.

ARRA mandates that plans notify certain current and former participants and beneficiaries about the premium reduction.

The Department of Labor created model notices to help plans and individuals comply with these requirements. Each model notice is designed for a particular group of qualified beneficiaries and contains information to help satisfy ARRA's notice provisions. Visit the link below for further information.

http://www.dol.gov/ebsa/COBRAmodelnotice.html

Because the Making Work Pay credit lowered tax withholding rates this year for 120 million American households, taxpayers should ensure that enough tax is withheld if they are among these groups: multiple job holders, families with both spouses working, workers who can be claimed as dependents by other taxpayers, and pensioners. Not adjusting withholding could result in taxes owed or smaller refunds, IRS said.

The IRS withholding calculator on IRS.gov can help a taxpayer compute the proper tax withholding. The worksheets in Publication 919, How Do I Adjust My Withholding?, can also be used to do the calculation. If the result suggests an adjustment is necessary, the taxpayer should submit a new Form W-4, Withholding Allowance Certificate, to his or her employer or adjust the amount of quarterly tax paid.

IRS also reminds unemployed workers that the first $2,400 of unemployment benefits received in 2009 are tax-free for federal income tax purposes.

Taxpayers should visit IRS.gov for more information about how to adjust federal income tax withholding, IRS recommends.