APS June Compliance Updates
There have been several state-level changes to minimum wage, along with federal-level changes regarding OASDI and From W-4. Here are your June compliance updates:
- IRS Increases Maximum Standard Automobile Cost
- OASDI Wage Base Projected to Increase in 2019
- IRS Issues Draft Form W-4, Guidance; Increases Employer Burden
- Iowa Tax Reform Bill
- Minnesota Sick, Safe Time Leave Law, Local Minimum Wage
- New Mexico Revises Withholding Tables
- New Hampshire 3rd Quarter Unemployment Tax Rates, Wage-Payment, Day-of-Rest Bills
- Idaho Revises Instructions for State Allowances, Filing Status
- Nevada Minimum Wage, Electronic Tax Filing
- Washington Unemployment Taxable Wage Base, Local Paid Leave
- Kentucky Releases New Withholding Exemption Form
- Michigan Extends Monthly Wage-Payment Deadline
- California Local Minimum Wage
- Washington, D.C. Tipped-Worker Wage
- Illinois Local Minimum Wage, Meal and Rest Breaks
- Maine Local Minimum Wage
- Maryland Minimum Wage
- Oregon Minimum Wage, State Transit Tax
- Rhode Island Paid Sick Leave
- North Carolina Conformity Date
- Hawaii Conformity Date
- Vermont Unemployment Tax Rate Changes
- New York Re-Adopts Emergency Rule on Home-Care Aides
- Alaska Finalizes Tip-Pooling Regulations
- Massachusetts Minimum Wage, Paid Leave
IRS Increases Maximum Standard Automobile Cost
The maximum standard automobile cost has increased for passenger automobiles, including trucks and vans, placed in service after December 31, 2017. The IRS stated in Notice 2018-42 that the maximum standard automobile cost may not exceed $50,000 for purposes of computing an allowance under a fixed and variable rate plan.
The maximum standard automobile cost had been $27,300 for passenger automobiles and $31,000 for trucks and vans.
OASDI Wage Base Projected to Increase in 2019
IRS Issues Draft Form W-4
The 2019 draft Form W-4 was released by the IRS with changes being made as a result of the 2017 tax code overhaul. Changes on the current draft form include:
- The draft form has 13 data fields and is an entire page; the 2018 form has 10 lines and filled less than half of a page.
- The 2018 form’s Line 5 for the total number of allowances is to be replaced by the 2019 version’s lines 5, 6, 7, and 8, for employees to indicate specific dollar amounts.
- The 2018 form’s Line 6 was renumbered as Line 9 of the 2019 version, and the wording of the line, with regard to additional amounts to withhold, was unchanged.
- The 2018 form’s Line 7 was renumbered as Line 10 of the 2019 version, and the wording of the line, with regard to claiming exemption from federal income tax withholding, was unchanged with the exception of referencing 2019 instead of 2018.
Draft Guidance Issued
A separate set of draft instructions was also released. The instructions provide some detail on how to fill out the draft Form W-4, like noting that only the highest earner is supposed to use the new fields when filling out the W-4. However, there is still clarification that needs to occur.
Increased Employer Burden
While the draft Form W-4 is meant to help employees regarding the tax code overhaul, the addition of at least four new input fields creates more complexity and burden for employers.
The four new fields are for non-wage income; itemized deduction amounts; reporting amounts that could be credits against tax liabilities; and income amounts from separate or multiple jobs within the household. These new data points would require employers to perform additional calculations based on those amounts to apply for federal income tax withholding purposes.
The draft form changes may affect state and local withholding tax processes, because many states still allow the use of the federal W-4 for state purposes. States with income tax withholding requirements will have to decide whether to adopt or reject the new system.
Iowa Tax Reform Bill
A tax-reform bill that provides new lower income tax rates for tax year 2019 was signed by the Iowa governor. Income tax wage brackets are to be annually adjusted for inflation. The bill also updates Iowa’s Internal Revenue Code conformity date to March 24, 2018 for tax year 2019.
Minnesota Sick, Safe Time Leave Law, Local Minimum Wage
Duluth Sick and Safe Time
Duluth, Minnesota adopted minimum standards for earned sick and safe time, effective January 1, 2020. Employees are to accrue one hour of earned sick and safe time for every 50 hours worked and up to 64 hours per year.
The leave may be used to attend to the employee’s own health and care; the health and care of a family member; or for reasons related to domestic abuse, sexual assault, or the stalking of the employee or employee’s family member.
Minneapolis Minimum Wage
The hourly minimum wage for Minneapolis employers with at least 101 employees will increase from $10.00 to $11.25 effective July 1, 2018. The hourly minimum wage for employers with up to 100 employees will be $10.25.
New Mexico Revises Withholding Tables
New Mexico’s withholding tables were revised to account for changes made by the new federal tax law. The revised tables are effective retroactive to January 1, 2018.
New Hampshire 3rd Quarter Unemployment Tax Rates, Wage-Payment, Day-of-Rest Bills
Q3 Unemployment Tax Rates
For the third quarter of 2018, New Hampshire’s unemployment tax rates for experienced employers and the rate for new employers will remain unchanged:
- Positive-rated experienced employers will range from 0.1 percent to 1.7 percent, with a solvency-threshold tax rate reduction of 1 percent.
- Negative-rated experienced employers will range from 3.3 to 7.5 percent, including a surcharge of 0.5 percent.
- New employers will have an unemployment tax rate of 1.7 percent.
Wage-Payment and Day-of-Rest Bills
Under measure S.B. 428, wages are owed to employees who are paid weekly within eight days after the end of the work week and are owed to employees who are paid biweekly within 15 days after the end of the work week.
Recreation-camp workers and youth-skill camp employees are added to categories of workers exempt from state day-of-rest and Sunday work requirements under measure S.B. 417.
Idaho Revises Instructions for State Allowances, Filing Status
Revised Instructions for State Allowances
The revised guide to Idaho Income Tax Withholding removes the requirement to add two more state allowances to calculate withholding for single employees claiming at least one state allowance.
Employees are still required to use the federal Form W-4 and a worksheet has been released that may be used to determine the number of state allowances to claim.
Nevada Minimum Wage, Electronic Tax Filing
Nevada Court Decides What Benefits Allow Lower Wage
A high court has ruled that employers may pay the lower of the state’s two minimum wages if it offers health insurance that costs at least an extra dollar an hour in wages and that costs employees no more than 10 percent of their gross taxable income from the employer.
Nevada’s minimum wage requirements state that employers providing qualified health benefits are allowed to pay employees the lower of the state’s two minimum wages, or $7.25 an hour. Employers that do not provide health benefits are required to pay employees $8.25 an hour.
Nevada Requires Electronic Unemployment Tax Filing
Starting July 1, 2018, Nevada employers are now required to electronically file quarterly unemployment tax and wage reports. The Department of Employment, Training and Rehabilitation may grant a one-year waiver of the requirement for employers that demonstrate insufficient resources to file electronically, economic hardship, or other good cause.
Washington Unemployment Taxable Wage Base, Local Paid Leave
Unemployment Taxable Wage Base
The Washington unemployment taxable wage base will increase to $49,800 in 2019. The current wage base for 2018 is $47,300.
Local Paid Leave
Seattle has issued a final ruling to confirm its paid sick and safe time ordinance to reflect state requirements. The revised ordinance will take effect July 1, 2018.
Kentucky Releases New Withholding Exemption Form
The new Form K-4, Kentucky’s Withholding Certificate, replaces a form that was the state’s equivalent to the federal Form W-4. The new form combines several forms that were previously used by employees military spouse exemption, exemption for compensation earned by nonresidents at Fort Campbell, and exemptions under a reciprocity agreement.
The form was revised because the personal exemption credit was amended to apply only to tax years prior to 2018. For more information, visit the Kentucky Tax Answers website.
Michigan Extends Monthly Wage-Payment Deadline
Michigan employers that regularly pay employees using a monthly pay period have more time to pay employees under a measure that extends the allowable time period by which workers must be paid.
The measure, which takes effect September 2, employers that have a regularly scheduled monthly pay period must pay employees within 15 days after the end of the monthly pay period all wages earned during that monthly pay period. Extending this time period has the potential to simplify the payroll process and reduce the number of wage-payment violations.
California Local Minimum Wage
Effective July 1, 2018, the hourly minimum wage will increase in the following California cities:
- Belmont: The city’s hourly minimum wage for workers who perform at least two hours of work a week in Belmont is to be $12.50 for employers who are subject to the Belmont Business License Tax or who maintain a facility in Belmont.
- Emeryville: The city’s hourly minimum wage is to rise to $15 from $14 for small employers having 55 or fewer employees and $15.69 from $15.20 for large employers having 56 or more employees.
- Long Beach: The hourly minimum wage for Long Beach hotel workers is to rise to $14.64 from $14.35 under a 2012 minimum wage and sick days ordinance, according to the city’s website.
- Los Angeles: The hourly minimum wage for employers with at least 26 employees is to rise to $13.25 from $12 for qualified employees, and for employers with fewer than 26 employees the hourly minimum wage is to rise to $12 from $10.50 for qualified employees. For employers that own, operate, or control hotels with at least 150 rooms, the hourly minimum wage is to be $15.66. For airport employees, the hourly minimum wage is to be $13.75 plus $5.24 in health benefits, for a combined minimum wage of $18.99.
- Los Angeles County: The hourly minimum wage for employers with at least 26 employees is to rise to $13.25 from $12, and for employers with fewer than 26 employees is to rise to $12 from $10.50.
- Malibu: The hourly minimum wage for employers with at least 26 employees is to rise to $13.25 from $12, and for employers with fewer than 26 employees is to rise to $12 from $10.50.
- Milpitas: The hourly minimum wage is to rise to $13.50 from $12. The minimum wage applies to employers that are subject to the city’s business license requirement or that maintain a business facility in the city. Employers must pay the hourly minimum wage to adult and minor employees who perform at least two hours of work in a week in Milpitas.
- Pasadena: The hourly minimum wage is to rise to $13.25 from $12 for employers with at least 26 employees, and is to rise to $12 from $10.50 for employers with no more than 25 employees.
- San Francisco: The hourly minimum wage is to rise to $15 from $14 for employees that perform work in San Francisco, including part-time and temporary employees.
- San Leandro: The hourly minimum wage is to rise to $13 from $12.
- Santa Monica: The hourly minimum wage is to rise to $13.25 from $12 for employers with at least 26 employees, and is to rise to $12 from $10.50 for employers with no more than 25 employees. The hotel-worker minimum wage is to rise to $16.10 from $15.66.
Washington, D.C. Tipped-Worker Wage
The direct minimum wage that D.C. tipped workers must receive will increase under a new measure. The $3.33 direct minimum wage that tipped employees are to receive is to increase until it reaches $15 by 2025. The tipped minimum wage is to be phased out in 2026 and tipped workers are to be paid at least the same minimum wage as other workers.
Illinois Local Minimum Wage, Meal and Rest Breaks
Local Minimum Wage
Effective July 1, Chicago’s hourly minimum wage will increase from $11 to $12. This increase is part of an ordinance that is to raise the hourly minimum wage to $13 by 2019. The hourly minimum cash wage for tipped employees will increase to $6.25.
Also, effective July 1, Cook County’s hourly minimum wage will increase from $10 to $11 and the hourly minimum cash wage for tipped employees will increase to $5.10.
Meal and Rest Breaks
Effective July 1, 2018, reasonable paid time for breaks must be provided to nursing mothers when they need to express milk during the first year after a child’s birth.
Maine Local Minimum Wage
The City of Portland’s hourly minimum wage will increase from $10.68 to $10.90 effective July 1, 2018. Tipped employees must receive an hourly cash wage of at least $5 and tips sufficient or equal to $10.90, or the employer must compensate the difference. Employers who do not comply with the minimum wage could be subject to a $100-a-day fine.
Maryland Minimum Wage
Effective July 1, 2018, the hourly minimum wage in Maryland is to rise to $10.10 from $9.25. The hourly minimum wage in Montgomery County is to increase from $11.50 to $12.25 for employers with 51 or more employees and to $12 for employers with 50 or fewer employees.
Oregon Minimum Wage, State Transit Tax
Effective July 1, 2018, Oregon’s standard hourly minimum wage will increase from $10.25 to $10.75. The Portland metro hourly minimum wage will increase from $11.25 to $12 and nonurban counties hourly minimum wage will increase from $10 to $10.50.
State Transit Tax
For pay periods starting July 1, 2018, Oregon employers are to start withholding a 0.1 percent transit tax from the pay of Oregon residents. This affects Oregon residents who work in other states and nonresidents who work in Oregon.
Employees who are not subject to income tax withholding are still subject to the statewide transit tax. Employers are to submit a quarterly report and annual reconciliation for the tax. For more information, see the state revenue department’s frequently asked questions.
Rhode Island Paid Sick Leave
Effective July 1, 2018, employers must provide eligible employees with paid sick and safe leave for the following reasons:
- To care for themselves or family members
- To use when their workplace or their child’s school or place of care closes due to a public health emergency
- To use when they or their family members are victims of domestic violence, sexual assault, or stalking
North Carolina Conformity Date
North Carolina’s Internal Revenue Code conformity date has changed to February 9, 2018, in its fiscal year 2019 budget bill. The measure also changed the state’s late-filing penalty for annual withholding reconciliations to $50 per day, up to a maximum of $1,000.
Hawaii Conformity Date
Hawaii’s Internal Revenue Code conformity date has changed to February 9, 2018, under S.B. 2821. Hawaii still allows reimbursements for qualified moving expenses and bicycle commuting expenses, which were suspended for federal tax purposes. The new conformity date is effective for tax years 2018 and later.
Vermont Unemployment Tax Rate Changes
Effective July 1, 2018, the unemployment tax rates for new employers in the construction industry will decrease. The general unemployment tax rate for new employers is to remain 1 percent, but new employers in construction industries with codes 236, 237, or 238 are to receive higher rates. The experienced employers tax rates are to range from 0.8 percent to 6.5 percent.
New York Re-Adopts Emergency Rule on Home-Care Aides
An emergency rulemaking for home-care aides has been re-adopted for a fourth time by New York. The ruling states that the hours worked by New York home-care aides may exclude meals periods and sleep times for those who work shifts of at least 24 hours.
The ruling is in effect from June 3 to July 30 and is currently taking comments that would make the home-care rule permanent.
Alaska Finalizes Tip-Pooling Regulations
A new ruling that takes effect June 29 states that employers may not redistribute employee tips among other workers. The regulations preserve protections that limit an employer’s ability to confiscate employee tips by replacing references to federal laws with new language provided by the state labor department.
Massachusetts Minimum Wage, Paid Leave
Under measure H.4640, Massachusetts workers could take up to 12 weeks of paid leave to care for sick family members or a newborn and up to 20 weeks of paid leave to tend to one’s own medical needs.
The measure would also raise the state’s hourly minimum wage to $15 by 2023 from the current $11 and phase out time and one-half pay for employees who work on Sunday.
How APS Can Help
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