APS August 2019 Compliance Updates
APS reports on relevant, impactful compliance updates each month to help keep you at the top of your compliance game. Updates this month include the release of state unemployment wage bases and unemployment tax rates, as well as updates to state electronic filing rules. Here are your August compliance updates:
- IRS Releases Guidance on Wage Forms
- EEOC Adds Guidance for Electronic Pay Data Collection
- Release Date for 2020 Withholding Form Delayed for Second Draft
- IRS Releases Draft for 2020 Nonemployee Pay Reporting Form
- IRS Expands Instructions for 2020 Draft Withholding Calculation Publication
- Office of Child Support Enforcement Updates Multi-state New Hire Form
- Federal Per Diem Rate Increases in 2020
- IRS Releases 2020 Form 1096 Draft
- 2020 State Unemployment Tax Rates
- 2020 State Unemployment Wage Bases
- 2020 Minimum Wage Changes
- 2020 State Electronic Filing Rules
- 2020 State Withholding Tables and Methods
- 2020 State Underpayment Interest Rates
- Colorado Issues Rules on Vacation Pay
- Idaho Set to Change Semimonthly Tax Deposit Threshold
- Illinois Passes Two Bills and Establishes Wage Theft Unit
- Two Kentucky Cities Increase Occupational Tax Rates
- Massachusetts Tax Deadline Extensions & Paid Leave Taxes
- New Jersey Boosts Wage Violation Penalties
- New York Signs Domestic Violence Leave Protections Bill
- New Mexico County Passes Paid Leave Bill
- North Carolina Exempts Disaster Workers from Taxes
- Ohio District Establishes Income Tax for 2019
- South Carolina Updates Child Support Payment Process
- Oregon Approves Paid Family Medical Leave Bill
IRS Releases Guidance on Wage Forms
The Internal Revenue Service released guidance on preparing substitute paper forms for the Wage and Tax Statement (Form W-2) and Transmittal of Wage and Tax Statement (Form W-3) on August 5, 2019. New guidance information will be published in an updated edition of “Publication 1141, General Rules and Specifications for Substitute Forms W-2 and W-3.”
EEOC Adds Guidance for Electronic Pay Data Collection
The Equal Employment Opportunity Commission (EEOC) released updated instructions for the collection of private-sector pay data information for calendar years 2017 and 2018. The updated guidance includes:
- An updated user guide to include an appendix that discusses on-screen help information for the online form.
- File upload specifications and validation process documents.
The deadline for submitting EEO-1 compensation information is September 30, 2019.
Release Date for 2020 Withholding Form Delayed for Second Draft
The Internal Revenue Service announced a revised draft of the 2020 Employee’s Withholding Allowance Certificate (Form W-4) will be released by the end of the summer. Updates to the form include adjustments to address privacy concerns and clarification on instructions. Due to the federal tax code overhaul (Pub. L. 115-97), personal exemption usage in figuring individual tax liability is suspended.
IRS Releases Draft for 2020 Nonemployee Pay Reporting Form
The Internal Revenue Service released a draft of the Nonemployee Compensation form (Form 1099-NEC) on July 24, 2019, to replace the amount of compensation paid to independent contractors that are reported in Box 7 of Form 1099-MISC. If payments are reported in Box 7, the form is to be filed by January 31, 2020. Otherwise, paper copies are to be filed by February 28, 2020, and electronic copies are to be filed by March 31, 2020.
IRS Expands Instructions for 2020 Draft Withholding Calculation Publication
The Internal Revenue Service released a second draft of instructions (Publication 15-T) on August 13, 2019, for withholding calculations. The second draft includes calculating 2020 federal income withholding, withholding adjustments for nonresident alien employees, and wage-bracket method tables for manual payroll systems with Forms W-4. A final version of the publication is set to release by the end of 2019.
Office of Child Support Enforcement Updates Multistate New Hire Form
The Office of Child Support Enforcement updated the Multistate Employer Registration Form for New Hire Reporting on July 31, 2019. Employers with employees in multiple states are eligible to use the form to register as a multistate employer. The new-hire reports are compared with federal and state child-support records to find parents with delinquent child-support payments.
Federal Per Diem Rate Increases in 2020
The U.S. General Services Administration announced an increase to the per diem rate for travel in the continental U.S. used to determine the tax-free limit for reimbursements in 2020. Starting October 1, 2019, the per diem rates will be the following:
- $151 for the standard per diem rate, and increase from $149.
- $96 for the lodging allowance, up from $94.
- $55 for the allowance for meals and incidental expenses.
IRS Releases 2020 Form 1096 Draft
2020 State Unemployment Tax Rates
The following state has announced its 2020 unemployment tax rates:
South Dakota’s unemployment tax rates will be the following:
- Zero to 0.8 percent for positive-rated experienced employers.
- 1.3 to 9.3 percent for negative-rated experienced employers.
- 1 to 1.2 percent for nonconstruction employers.
- 3 to 6 percent for construction employers.
- Zero to 0.53 percent investment fee for experienced employers.
- 0.55 percent investment fee for new employers.
2020 State Unemployment Wage Bases
The following state has SUTA wage base changes for 2020:
- South Dakota - $15,000
2020 Minimum Wage Changes
One state has announced changes to its minimum wage rates beginning January 1, 2020:
- Minnesota - $10
2020 State Electronic Filing Rules
2020 State Withholding Tables and Methods
2020 State Underpayment Interest Rates
One state has updated its state underpayment interest rate for 2020:
- New Hampshire - 7 percent
Colorado Issues Rules on Vacation Pay
The Colorado Department of Labor and Employment released temporary rules for vacation-pay on August 20, 2019. The temporary rules on vacation pay include:
- All vacation pay earned under the terms of an employer-employee agreement must be paid at separation of employment.
- Forfeiting earned vacation pay is not allowed, but does allow agreements to address some aspects of paid time off.
- Tips, gratuities, or other similarly paid amounts are to be treated identically under law.
- Certified copies of citations, assessments, wage orders, and penalties may be filed in a court with jurisdiction over those engaged in a wage complaint.
- Sources may remain confidential if they provide information may be used as a means to help acquire more evidence in an investigation.
The temporary rules are in effect from August 20, 2019, to December 18, 2019.
Idaho Set to Change Semimonthly Tax Deposit Threshold
Idaho’s State Tax Commission proposed a rule that would increase the threshold above which employers are to remit income tax semimonthly on August 7, 2019. The proposed rule would require employers to remit if they withhold at least $25,000 in taxes a month or $300,000 a year. Employers who withhold less than these thresholds are required to deposit monthly, quarterly, or annually, depending on the amount of state taxes withheld from employees.
Illinois Passes Two Bills and Establishes Wage Theft Unit
Illinois Passes Bills Affecting Worker Tips and Leave
Illinois Governor J.B. Pritzker passed two bills including The Illinois Wage Payment and Collection Act (H.B. 3405) and The School Visitation Rights Act (H.B. 2830) that will go into effect in 2020. Changes made to the Illinois Wage Payment and Collection Act established tips are the property of Illinois workers, and they must be paid gratuities within 13 days after the end of the pay period when the tips were earned. Amendments made to the School Visitation Rights Act note employers cannot terminate workers from absences due to academic or behavioral meetings and school conferences.
Illinois Establishes Unit to Fight Wage Theft
Illinois Governor J.B. Pritzker passed S.B. 161 that includes establishing a wage-theft unit and taskforce. The Worker Protection Unit will guard against wage theft and other unlawful practices and will initiative and enforce legal proceedings related to wage payment, workplace safety, and fair employment practices. The unit will work with the state’s labor department to identify unlawful activity and pursue wage payment violations and unfair labor practices.
Two Kentucky Cities Increase Occupational Tax Rates
Two Kentucky cities, Camargo and Jeffersonville, increased tax rates from 1 percent to 2 percent that went into effect on July 1, 2019.
Massachusetts Tax Deadline Extensions & Paid Leave Taxes
Massachusetts Extends Tax Deadlines for Storm Victims
Massachusetts has extended state tax filing and payment deadlines for storm victims in the towns of Barnstable, Brewster, Chatham, Dennis, Harwich, Natick, Mashpee, Sandwich, and Yarmouth. Storm victims now have until November 15, 2019, to file returns and make payments.
Massachusetts to Base Paid Leave Taxes on Payment Date
Massachusetts’ Department of Family and Medical Leave announced on July 26, 2019, the state’s new process for paid leave contributions. Under the new process, the state’s paid leave contributions are to be determined by the date of payment instead of the dates when services were performed.
New Jersey Boosts Wage Violation Penalties
New Jersey’s governor signed a bill (A-2903/S-1790) that would increase the penalties for employers who violate state wage and benefits requirements. The measure includes penalties like jail time in addition to increasing fines for underpaying workers, failing to provide promised benefits, or retaliating against workers for making a wage claim. Employees are also able to collect double the wages owed in civil or criminal cases. The penalties for wage violations under the signed bill include:
- A $500 to $1,000 fine, a jail term of 10 to 100 days, or both for a first offense.
- A $1,000 to $2,000 fine, a jail term of 10 to 100 days, or both for a second offense.
- A $2,000 to $10,000 fine, a jail term up to 18 months, or both for a third offense.
New York Signs Domestic Violence Leave Protections Bill
New York Governor Andrew Cuomo signed a bill (S.1040/A.4618) that requires New York employers to allow victims of domestic violence to take time off from their jobs to attend to personal needs and legal proceedings. The bill clarifies the protections and accommodations that employers must provide to domestic violence victims. The measure is set to take effect on November 18, 2019.
New Mexico County Passes Paid Leave Bill
Bernalillo County’s Board of County Commissioners passed the Employee Wellness Act which applies to businesses in the unincorporated parts of the county on August 20, 2019. Employees in Bernalillo County will have access to paid time off for any reason starting July 1, 2020.
North Carolina Exempts Disaster Workers from Taxes
North Carolina’s governor signed a bill (S.B. 498) that would exempt out-of-state employees working in disaster recovery efforts from state income or unemployment tax. Nonresident businesses performing disaster-related work are required to send the state revenue department a list of employees who performed work in the state and the amounts they were paid within 90 days of ending business in North Carolina.
Ohio District Establishes Income Tax for 2019
The Regional Income Tax Agency announced an income tax affecting an Ohio district on July 31, 2019. The income tax affects the Milford Joint Economic Development District in Clermont County, with an initial tax rate of 1 percent. The income tax went into effect on August 1, 2019.
South Carolina Updates Child Support Payment Process
South Carolina’s Department of Social Services announced they are to complete their transition to a new electronic payment system by August 2019. Cases receiving their services through their department and private support cases are to be included in the new system.
Oregon Approves Paid Family Medical Leave Bill
The state passed H.B. 2005 which allows Oregon employees to receive up to 12 weeks of paid family and medical leave. Employees are eligible to take paid time off starting in 2023 to care for a new baby, foster child, newly adopted child, or stepchild; to recover from a serious illness; or for reasons related to domestic violence, harassment, sexual assault, or stalking. The program will be funded by mandatory employer and employee contributions that will start in 2022. Employer and employee contributions are the following:
- Employers with more than 25 workers and employees will have to contribute a payroll assessment capped at 1 percent of wages, up to the federal Old-Age, Survivors and Disability Insurance wage base.
- Employers will fewer than 25 employees will not have to contribute to the paid family and medical leave insurance program.
Oregon workers must earn at least $1,000 in wages a year to qualify for family and medical leave benefits.
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