APS June 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 state and local changes as well as updates to underpayment interest rates. Here are your June compliance updates:
- IRS to Stop Accepting Faxing for Employer Tax Transcripts
- Third Quarter Tax Rates Decrease
- New 2020 Form W-4 to be Released
- Publication 15-T to Help Calculate Withholdings in 2020
- Updated Specifications for Filing Form W-2 Electronically
- EEOC New Wage Collection Online Portal to Open July
- State Unemployment Tax Rates
- State Unemployment Wage Bases
- State Underpayment Interest Rates
- Chicago, Illinois May Increase Minimum Wage
- Electronic Filing Becomes Mandatory in Colorado
- Minimum Wage Changes for Colorado Home-Care Providers
- Illinois Passes Budget and New Graduated Income Tax Bill
- Kentucky Increases Occupational Tax Rate
- Louisiana Updates Unclaimed Wages Filing Policy
- Massachusetts Delays Paid Family Leave Program
- New York Waterfront Commission lowers Payroll Tax Rate
- Nevada Payroll Tax Rate Bill & Payroll Cards
- Philadelphia Wage Taxes to Drop
- Ohio Regional Income Tax Agency to Add Five Municipalities
- Oklahoma Filing and Payment Deadline Extended
- Oregon Disabled Workers to Receive Full Minimum Wage
- New Oregon Bill Increases Garnishments
- Texas Wage Payment Options and Minimum Wage
- Two Texas Cities Establish New Sick Leave Law
- Employers in Wisconsin Receive W-2 Penalty Emails
- Washington Proposes Increases to Salary Threshold
IRS to Stop Accepting Faxing for Employer Tax Transcripts
The Internal Revenue Service will end use of tax transcripts faxing services on June 28, 2019. The new change will affect how tax professionals and individual taxpayers submit tax transcripts including the 94x series of forms. Eliminating the use of tax transcript faxing services is part of the IRS’ strategy to decrease identity theft.
Third Quarter Tax Rates Decrease
The Internal Revenue Service released tax interest rates for the third quarter of 2019 on June 5, 2019. The tax interest rates for the three-month period are the following:
- 5 percent for noncorporate overpayments and underpayments.
- 4 percent for corporate overpayments.
- 5 percent for corporate underpayments.
- 2.5 percent for the portion of a corporate overpayment exceeding $10,000.
- 7 percent for large corporate underpayments.
Overpayment and underpayment tax rates for taxpayers who are not considered companies will be the federal short-term interest rate plus 3 percentage points.
New 2020 Form W-4 to be Released
The Internal Revenue Service announced the new W-4 form for 2020 will be released on June 7, 2019, and will include instructions for employers. The revised form will also include the percentage method and wage-bracket tables.
Publication 15-T to Help Calculate Withholdings in 2020
The Internal Revenue Service released a draft of the Federal Income Tax Withholding Methods Form (Publication 15-T). This new publication will aid in calculating federal income tax withholding and the wage bracket method table.
Updated Specifications for Filing Form W-2 Electronically
The Social Security Administration released its Specifications for Filing Forms W-2 Electronically (EFW2) that includes information on electronically filing the Wage and Tax Statement Form ( Form W-2). Changes in the publication include changes to the annual employee statement, 2019 Social Security and Medicare coverage thresholds, and the maximum and wage tax table.
EEOC New Wage Collection Online Portal to Open July
The EEOC has developed a new online portal for wage collection data that will be open for filers on July 15, 2019. The EEOC is expected to begin contacting employers with at least 100 employees, starting July 1, 2019, via mail and July 2, 2019, via email about how to submit Component 2 data from the years 2017 and 2018. Log-in information for the new portal is expected to be released on July 12, 2019.
State Unemployment Tax Rates
The following state has announced its 2020 unemployment tax rates:
Vermont’s unemployment tax rates will be the following:
- 0.8 percent to 6.5 percent for experienced employers.
- 1 percent for new employers.
- 4 percent for new employers in the building construction industry.
- 5.6 percent for new employers in the heavy and civil engineering construction industry.
- 4.8 percent for new employers in the special trade contracting industry.
State Unemployment Wage Bases
One state has announced its unemployment taxable wage bases for 2020. The following state has SUTA wage base changes for 2020:
- Washington - $52,700
State Underpayment Interest Rates
The following states have updated their underpayment interest rate for 2019:
- Alabama - 5 percent
- North Carolina - 5 percent
- South Carolina - 5 percent
- Virginia - 7 percent
Chicago, Illinois May Increase Minimum Wage
Chicago could see an increase in the minimum wage from $15 an hour by 2021. A previous measure passed, expected to raise the minimum wage $15 an hour, but not until 2025. This new measure would raise the minimum wage to $14 an hour by July 1, 2020, and $15 an hour by July 1, 2021.
Electronic Filing Becomes Mandatory in Colorado
Colorado’s governor signed H.B. 1256, a bill that requires the state revenue department to create regulations that require all filings of Forms W-2 and withholding payments to be electronic starting January 1, 2020.
Minimum Wage Changes for Colorado Home-Care Providers
Colorado passed (S.B. 19-238) that sets the minimum wage for home-care providers at $14.21 an hour. This measure is scheduled to take effect starting July 1, 2020, and also states home-care agencies must report where they received funding to pay their workers to the Department of Health Policy and Financing starting December 31, 2020. They will also be required to keep verification documents for three years.
Illinois Passes Budget and New Graduated Income Tax Bill
Illinois Governor J.B. Pritzker signed a $40.1 billion budget for the fiscal year 2020 and a plan that incorporates an income tax focused towards wealthy taxpayers. The governor also signed S.B. 687 that would replace the state’s flat income tax with a graduated income tax. The income tax rate would range from 4.75 percent to 7.99 percent and be divided into six brackets. The new plan will not take effect until after voters approved an amendment to remove the flat tax rate in the 2020 ballot. This could delay the new income tax until the year 2021.
Kentucky Increases Occupational Tax Rate
Kentucky announced an increase of an occupational tax rate for Montgomery County of 1 percent up from 2 percent that will go into effect on July 1, 2019.
Louisiana Updates Unclaimed Wages Filing Policy
Massachusetts Delays Paid Family Leave Program
Massachusetts’ paid family leave program was scheduled to begin July 1, 2019, has been delayed until October 1, 2019. The program that allows employees to have up to 26 weeks of paid leave has been delayed out of fears of chaotic rollout caused by confused employers. The program is set to take 63 percent of workers’ weekly wage to fund the program, with only employers with more than 25 employees mandated to participate. Employers have until December 20, 2019, to apply for exemptions.
New York Waterfront Commission lowers Payroll Tax Rate
The local payroll tax rate is set to decrease to 1.8 percent from 1.84 percent for employers registered with the Waterfront Commission of New York Harbor. This tax is paid by New York and New Jersey employers who do business in the port district of New York.
Nevada Payroll Tax Rate Bill & Payroll Cards
Nevada Passes Payroll Tax Rate Bill
Nevada passed Bill 551 that focuses on state administrator for corporate income, individual income, and excise tax purposes and will take effect on July 15, 2019. The measures include:
- Rate adjustments that will no longer be used by the Department of Taxation to establish if payroll taxes should drop the following year.
- Current operative rates of payroll taxes will be sustained.
- The use of rate adjustments to select lowered payroll tax rates by the Department of Taxation is prohibited.
- Scholarship organizations that violate terms will be required to repay credit approved for back to the Department of Taxation.
Payroll Cards Now Qualify as Property in Nevada
Employers in Nevada are now required to include payroll cards as property to be reporting to the state if unclaimed by employees. These prepaid debit cards used to pay employees, unclaimed wages from June 30, 2018, must be filed on the online portal by October 31, 2019, for the calendar year 2018. All unclaimed wages from 2019 cannot be included in inline reports until 2020.
Philadelphia Wage Taxes to Drop
Philadelphia announces that resident and nonresident wage tax rates will decrease to the following starting July 1, 2019:
- 3.8712 percent for residents.
- 3.4481 percent for nonresidents.
Ohio Regional Income Tax Agency to Add Five Municipalities
Ohio’s Regional Income Tax Agency announced five municipalities have joined their agency for income taxes and will take effect on July 1, 2019. The five municipalities include Batavia, Bellville, Columbiana, Crestline, and Pomero.
Oklahoma Filing and Payment Deadline Extended
Internal Revenue Service announced June 3, 2019 they have postponed the deadline for filing and payment for victims of severe storms, tornadoes, straight-line winds, and flooding In Oklahoma until September 16, 2019. Individuals and businesses with deadlines falling between May 7, 2019, and September 16, 2019, will have this time to file returns and pay any taxes originally due.
Oregon Disabled Workers to Receive Full Minimum Wage
Oregon has passed S.B. 494 that would eliminate the subminimum wage for disability workers in phases:
- $9.25 on July 1, 2020.
- $10.75 on July 1, 2021.
- $12.50 on July 1, 2022.
- Full minimum wage on July 1, 2023.
New Oregon Bill Increases Garnishments
Oregon passed (S.B. 519-A) that increases the amount of disposable income exempt from garnishment. The maximum amount subject to garnishment is 25 percent of an employee’s post-tax earnings. The amount of disposable earnings exempt from a garnishment was increased to the following:
- $254 for one week.
- $509 for two weeks.
- $545 for half of a month.
- $1,090 for one month.
This new bill is set to go in effect on January 1, 2020.
Texas Wage Payment Options and Minimum Wage
Texas Adds Payroll Cards as Wage Payment Option for Employers
Texas passed a measure (H.B. 2240) that allows Texas employers to pay wages to employees through payroll cards. Before the measure was passed, employers could pay wages by cash, check, direct deposit or another form agreed to in writing by an employee. Once the measure takes effect on September 1, 2019, payroll card programs will be available to all employers and employees will have to choose to opt out of the program.
Texas Disabled Workers Offered Minimum Wage on State Contracts
Texas passed a bill (S.B.753) that would require disabled workers who are employed under state contracts to be paid the state’s minimum hourly wage of $7.25. The Texas Purchasing From People With Disabilities program requires nonprofit private companies that contract with the state to ensure a certain percentage of their workforce includes workers with disabilities. State contractors will need to develop a plan to increase disabled workers’ minimum pay to the state’s minimum wage rate by September 1, 2020.
Two Texas Cities Establish New Sick Leave Law
Dallas and San Antonio’s paid leave law will go into effect August 1, 2019, due to the state legislature not passing a measure banning cities from implementing paid sick leave. This new law would require Dallas and San Antonio employers with more than five employees to offer paid leave. In San Antonio, workers will be offered one hour of leave for every 30 hours, while workers at small businesses in Dallas will be offered 48 hours and those at medium to larger sized businesses will be offered 60 hours of paid leave.
Employers in Wisconsin Receive W-2 Penalty Emails
Wisconsin has emailed 2,700 employers letters notifying them of penalties from the misfiling of their Forms W-2. The state has given all recipients a 60-day period to appeal the penalty and file the forms correctly.
Washington Proposes Increases to Salary Threshold
Washington’s Department of Labor and Industries proposed changes to the salary threshold and job duties tests on June 5, 2019. The proposed changes include the minimum salary to increase 2.5 times for workers who are exempt from minimum wage and overtime requirements. There will be a comment period for the bill between June 5, 2019, and September 6, 2019, and is expected to go into effect in late 2019. If put in place, there will be a gradual increase in salary over the course of 5 years.
How APS Can Help
APS brings innovation and scalability to modern human capital management. We believe that our clients, their employees, and our partners deserve the best, easy-to-use human capital management platform delivered with personalized service and support. We build our unified technology from the ground up, focusing on usability, efficiency, and adoption. APS understands the challenges organizations of all sizes face, which is why we craft a full spectrum of cloud solutions that address all aspects of employee management.
APS is different because of our personalized approach to technology and service. As a result, we continually maintain a 98% customer retention rate. For the past five years, we have ranked as a High Performer, the #1 software company in Louisiana, as well as Best Customer Support, Ease-of-Use, Functionality, and Product Quality by G2 Crowd.
To learn more, please visit our website at www.apspayroll.com or call 855-945-7921.
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