US Tax News 2007 Archive - Sponsored by HRD & Payroll Solutions
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10 March 2007
Department of Health and Human Services: Child support and the military
Department of Labor: Characteristic of minimum wage workers
Department of Labor: Bakery and owner to pay over $25,000 in back wages and interest
Department of Labor: Supermarket chain will pay more than $127,000 to settle US Labor Department lawsuit
Department of Labor: Hotels to pay more than $24,000 to 12 low wage workers
Department of Labor: Restaurant owner to pay over $39,000 to 21 low wage workers
Department of Labor: $190,000 recovered in back wages for 304 employees of Vatterott College in 9 states
Department of Labor: Garment contractor pays more than $66,000 in back wages to 57 employees
Department of Labor: Construction company to pay nearly $530,000 to 932 workers
Department of Labor: Farm labor contractor assessed $38,600 in penalties and back wages following deaths of 3 workers
Internal Revenue Service: Spring 2007 issue of SSA/IRS Reporter
Internal Revenue Service: Employer payroll deadlines (from Publication 509)
Internal Revenue Service: Internal Revenue Bulletin 2007-9, February 26, 2007
Internal Revenue Service: Internal Revenue Bulletin 2007-10, March 5, 2007
Internal Revenue Service: Tax Calendar - Dates and Actions - March 2007
Internal Revenue Service: Tax filing tips for 2007
Internal Revenue Service: New forms and publications
Alabama: IRS grants tax relief for Alabama storm and tornado victims
California: The ABC of California Payroll Taxes
Georgia: IRS grants tax relief for Georgia storm and tornado victims
Louisiana: IRS grants tax relief for Louisiana storm and tornado victims
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3 February 2007
For the latest tax-related news, check out the following links:
US Senate
Fair Minimum Wage Bill approved by US Senate
On Thursday, February 1, 2007, the US Senate approved the Fair Minimum Wage Bill by 94 votes to 3. The Bill provides for increases in the federal minimum wage to
- $5.85 an hour, beginning on the 60th day after the date of enactment of the Fair Minimum Wage Act of 2007
- $6.55 an hour, beginning 12 months after that 60th day, and
- $7.25 an hour, beginning 24 months after that 60th day.
The Bill also provides for increases to the minimum wage applicable in the Northern Mariana Islands (the chain of islands north of Guam, in the Philippine Sea), initially to $3.55 and followed by $0.50 every six months until it equals the federal minimum wage.
The Bill as approved by the US House of Representatives on January 5 contained three sections. The version of the Bill passed by the US Senate has 50 sections. The additions includes measures to extend small business tax cuts, plug some corporate tax loopholes and limit executive compensation. The two versions of the Bill have to be reconciled by the two Houses and the final version signed by the President before the Fair Minimum Wage Act of 2007 becomes law.
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US Department of Labor
Wal-Mart workers to receive more than $33 Million in back wages
The U.S. Department of Labor has announced that Wal-Mart Stores Inc. will pay over $33 million in back wages to resolve issues that arose under the Fair Labor Standards Act (FLSA) concerning how the company computed overtime pay. The agreement covers 86,680 employees who worked for the company from February 1, 2002 to January 19, 2007.
To finalize the agreement, the Labor Department filed a complaint in the U.S. District Court for the Western District of Arkansas, Ft. Smith Division, against Wal-Mart Stores Inc. alleging violations of the FLSA overtime provisions. A consent judgment ordering the company to pay back wages and enjoining it from further violations was filed at the same time. The consent judgment was approved by the court.
Wal-Mart brought this matter to the attention of the Department of Labor after an internal audit raised concerns regarding overtime computations. The issues involve how Wal-Mart treated incentives and other premium payments in the calculation of employees' overtime pay. The agreement also addresses payment of overtime to certain non-exempt salaried interns, manager trainees, and programmer trainees.
Under the terms of the consent judgment, Wal-Mart has agreed to pay all back wages the Labor Department has determined are owed for violations identified in the consent judgment to present and former employees, and to pay pre- and post-judgment interest. The company has also agreed to set up a Web site (www.dol.settlement.wal-mart.com) and to staff a toll-free telephone number, (888) 262-1559 or TTY (800) 318-7442, to answer questions regarding the back wages. A third-party administrator will disburse the payments to the affected employees. The agreement resolves only those violations identified in the consent judgment. It does not affect ongoing private litigation or workers' ability to file complaints with the Labor Department.
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Internal Revenue Service
Employee Plan News
A special edition of Employee Plan News, dated February 2007, has been published.
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Employer payroll deadlines (from Publication 509)
February 12
Social security, Medicare, and withheld income tax. File Form 941 for the fourth quarter of 2006. This due date applies only if you deposited the tax for the quarter in full and on time.
Certain small employers. File Form 944 to report social security and Medicare taxes and withheld income tax for 2006. This due date applies only if you deposited the tax for the quarter in full and on time.
Farm employers. File Form 943 to report social security and Medicare taxes and withheld income tax for 2006. This due date applies only if you deposited the tax for the quarter in full and on time.
Federal unemployment tax. File Form 940 for 2006. This due date applies only if you deposited the tax for the quarter in full and on time.
February 15
Social security, Medicare, and withheld income tax. If the monthly deposit rule applies, deposit the tax for payments in January.
February 16
All employers. Begin withholding income tax from the pay of any employee who claimed exemption from withholding in 2006, but did not give you a new Form W-4 to continue the exemption this year.
Tax Calendar - Dates and Actions - February 2007
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Internal Revenue Bulletin 2007-5, January 29, 2007
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Internal Revenue Bulletin 2007-6, February 5, 2007
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Tax filing tips for 2007
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New forms and publications
The following documents have been published in the past week:
- 0107 Publ 1915 Understanding Your IRS Individual Taxpayer Identification Number
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- 1206 Publ 1518 IRS Tax Calendar for Small Businesses and Self-Employed
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- 0107 Form W-7 Application for IRS Individual Taxpayer Identification Number
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- 2006 Form 8846 Credit for Employer Social Security and Medicare Taxes Paid on Certain Employee Tips
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- 2007 Form W-4 (SP) Employee's Withholding Allowance Certificate (Spanish version)
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- 2007 Form 1040-ES (SP) U.S. Estimated Tax for Individuals - Puerto Rico
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- 0107 Publ 15-B Employer's Tax Guide to Fringe Benefits
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- 0107 Publ 509 Tax Calendars
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Iowa
Governor signs minimum wage into law
On January 25, Governor Chet Culver signed into law an increase to the Ohio minimum wage. The current rate of $5.15 will go up to $6.20 on April 1, 2007, and again to $7.25 on January 1, 2008. The increase is expected to benefit more than 250,000 Iowans.
The minimum wage for new employees serving a 90-day training period will be raised from $4.25 to $5.30 on April 1, 2007 and to $6.35 on January 1, 2008.
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Maine
Legislative Report on independent contractors
The Maine Department of Labor has released a study examining the laws and practices regarding the definition of "employment" and "independent contractor" for the purposes of Unemployment Compensation.
An analysis of the IRS and Workers' Compensation employment tests showed that there were strong similarities to the Unemployment Compensation ABC test standards. However a significant and important difference is that the employment standard used for unemployment compensation purposes starts with a presumption of employment - neither of the other tests are based on this premise. The presumption of employment is the foundation of the Maine Unemployment Compensation Program and is key to its capacity to carry out its statutory function as protection against the hazards of unemployment for the unemployed worker, his or her family and the entire community.
Taking into consideration both the internal analysis and the opinions of the survey respondents, the department recommends maintaining the current statutory definition of employment and the ABC test for unemployment compensation purposes. However, the Workers' Compensation Board has indicated a willingness to consider adopting the same employment definition and ABC test used for unemployment compensation purposes for determining employment coverage under the Maine Workers' Compensation program. This would help alleviate the confusion created by the multiple employment definitions used in Maine. It would make both insurance and benefit programs consistent with one another in the determination of who should be covered and lessen the uncertainty currently experienced by employers in trying to ascertain whether an individual is an employee or independent contractor. However, before moving to adopt this plan, the Workers' Compensation Board would like to more closely examine the potential ramifications of such a move.
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Maryland
Employers required to remove Social Security Numbers from paychecks
The Maryland Department of Labor, Licensing and Regulation has issued a reminder to employers that Social Security numbers may no longer appear on employee paychecks, pay stubs, or direct deposit notifications, effective immediately. An employer who violates the law can face criminal charges with a maximum penalty of $1000.
House Bill #388, passed by the Maryland General Assembly in the 2006 session states: "An employer may not print or cause to be printed an employee's Social Security number on the employee's wage payment check, an attachment to an employee's wage payment check, a notice of direct deposit of an employee's wage or a notice of credit of an employee's wage to a debit card or card account."
The Maryland division of Unemployment Insurance Benefits currently uses only the last four digits of a person's Social Security number on benefit checks and State of Maryland employee pay stubs no longer contain an employee's SSN according to the State Comptroller's Office.
The bill passed amid growing concern regarding identity theft and recognition that unauthorized use of SSN's is the most common way criminals gain access to an individual's personal and financial information.
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Michigan
Travel reimbursement rates effective January 1, 2007
The Department of Management and Budget has increased the Workers' Compensation travel reimbursement rate to $0.485 per mile effective January 1, 2007. All other rates remain the same.
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North Carolina
New mileage rates from January 1, 2007
For trips taken on or after January 1, 2007, for medical treatment in workers' compensation cases, the new mileage rate is $0.485 a mile, provided the roundtrip is 20 miles or more.
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27 January 2007
For the latest tax-related news, check out the following links:
Internal Revenue Service
Taxpayers Have Until April 17 to File and Pay
Taxpayers across the nation will have until Tuesday, April 17, 2007, to file their 2006 returns and pay any taxes due, the Internal Revenue Service has announced.
Taxpayers will have extra time to file and pay because April 15 falls on a Sunday in 2007, and the following day, Monday, April 16, is Emancipation Day, a legal holiday in the District of Columbia.
This means the entire country has an April 17 deadline. Previously, the April 17 deadline applied just to individuals in the District of Columbia and six eastern states who are served by an IRS processing facility in Massachusetts, where Patriots Day will be observed on April 16.
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Employer payroll deadlines (from Publication 509)
January 31
All employers. Give your employees their copies of Form W-2 for 2006 If an employee agreed to receive Form W-2 electronically, have it posted on a website and notify the employee of the posting.
Social security, Medicare, and withheld income tax. File Form 941 for the fourth quarter of 2006. Deposit any undeposited tax. (If your tax liability is less than $2,500, you can pay it in full with a timely filed return.) If you deposited the tax for the quarter in full and on time, you have until February 12 to file the return.
Certain small employers. File Form 944 to report social security and Medicare taxes and withheld income tax for 2006. Deposit any undeposited tax. (If your tax liability is less than $2,500, you can pay it in full with a timely filed return.) If you deposited the tax for the year in full and on time, you have until February 12 to file the return.
Farm employers. File Form 943 to report social security and Medicare taxes and withheld income tax for 2006. (If your tax liability is less than $2,500, you can pay it in full with a timely filed return.) If you deposited the tax for the year in full and on time, you have until February 12 to file the return.
Federal unemployment tax. File Form 940 for 2006. If your undeposited tax is $500 or less, you can either pay it with your return or deposit it. If it is more than $500, you must deposit it. However, if you deposited the tax for the year in full and on time, you have until February to file the return.
Tax Calendar - Dates and Actions - January 2007
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Internal Revenue Bulletin 2007-4, January 22, 2007
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Tax filing tips for 2007
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Changes to current tax forms, instructions and publications
Corrections to the following documents have been announced in past week:
- Publication 509 Tax Calendars for 2007
Link
New forms and publications
The following documents have been published in the past week:
- 2006 Form W-2AS American Samoa Wage and Tax Statement (Info Copy Only)
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- 2007 Form W-2AS American Samoa Wage and Tax Statement (Info Copy Only)
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- 2006 Form W-3SS Transmittal of Wage and Tax Statements (Info Copy Only)
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- 2007 Form W-3SS Transmittal of Wage and Tax Statements (Info Copy Only)
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- 2006 Form W-2VI U.S. Virgin Islands Wage and Tax Statement (Info Copy Only)
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- 2007 Form W-2VI U.S. Virgin Islands Wage and Tax Statement (Info Copy Only)
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- 2006 Form W-2GU Guam Wage and Tax Statement (Info Copy Only)
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- 2007 Form W-2GU Guam Wage and Tax Statement (Info Copy Only)
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- 2007 Form W-2 Wage and Tax Statement (Info Copy Only)
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- 2007 Form W-3 Transmittal of Wage and Tax Statements (Info Copy Only)
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- 0107 Form 4852 Substitute for Form W-2, Wage and Tax Statement, or Form 1099R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRA's Insurance Contracts, Etc.
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- 2007 Form 1040-ES (E) U.S. Estimated Tax for Individuals
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- 2006 Publ 509 Tax Calendars
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- 2007 Inst W-3SS Instructions for Form W-3SS
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- 2005 Form 940-EZ Employer's Annual Federal Unemployment (FUTA) Tax Return
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California
Tax forms and publications
The following forms and publications have been revised and resissued.
- Fact Sheet DE 231SE Statutory Employees
- E 88ALL-I Instructions for Preparing the DE 88/DE 88ALL Payroll Tax Deposit Coupon
- DE 231G Information Sheet: Construction Industry
- DE 678 Tax and Wage Adjustment Form
- DE 231D Information Sheet: Multistate Employment
- DE 4 Employee's Withholding Allowance Certificate - Print Version
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20 January 2007
For the latest tax-related news, check out the following links:
Department of Health and Human Services
Child support withholding
An updated version of the publication Basic Income-Withholding Order Guidelines on Allocation for Multiple Orders for Private Employers is now available
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Internal Revenue Service
Tax Calendar - Dates and Actions - January 2007
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Internal Revenue Bulletin 2007-3, January 16, 2007
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Tax filing tips for 2007
Link
Changes to current tax forms, instructions and publications
Corrections to the following documents have been announced in past week:
- 2007 Form 1040-ES Estimated Tax for Individuals
New forms and publications
The following documents have been published in the past week:
- Instructions for Forms W-2 and W-3 Wage and Tax Statement and Transmittal of Wage and Tax Statements
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- 2006 Form 944 (PR) Employer's Annual Federal Tax Return (for Puerto Rico)
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- 2006 Form 1040 U.S. Individual Income Tax Return
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- 2006 Form W-2 Wage and Tax Statement (Info Copy Only)
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- 2006 Form W-3 Transmittal of WAGE and Tax Statements (Info Copy Only)
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- 2006 Inst W-2 and W-3 Instructions
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- 2007 Form W-3 Transmittal of Wage and Tax Statements (Info Copy Only)
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- 2007 Form W-2 Wage and Tax Statement (Info Copy Only)
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- 0107 Form 2159 Payroll Deduction Agreement
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- 0107 Publ 926 Household Employer's Tax Guide
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District of Columbia
Withholding Instructions and Tables 2007
Withholding instructions and tables for 2007 have been published by the DC Office of Tax and Revenue.
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West Virginia
Withholding Tax Tables revised for 2007
The withholding tables included in the booklet WV/IT-100.1 Employers Withholding Instructions & Tax Tables have been replaced by new Tables that are effective from January 1, 2007.
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13 January 2007
For the latest tax-related news, check out the following links:
Department of Labor
Washington company and president sued to restore employee contributions to Retirement Plan
The U.S. Department of Labor has sued Washington-based Sumas Transport, Inc. (STI) and its president, Dennis Scheffer, for failing to deposit employees' salary reduction contributions into the company's retirement plan. The suit seeks to restore losses to the retirement plan and remove Scheffer from his position as fiduciary to the plan.
The suit, filed December 29, 2006, in federal district court in Seattle, alleges that Scheffer and STI violated their fiduciary duties under the Employee Retirement Income Security Act (ERISA) when they failed to remit more than $28,000 in contributions deducted from employees' paychecks from June 30, 2001 through March 22, 2003. The plan's governing documents allowed participants to make salary reduction contributions to the plan.
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Administrator Opinion Letters - Fair Labor Standards Act
(2006/45) Copy editors and senior copy editors and the administrative exemption
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(2006/46) Film location managers and the administrative exemption
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Department of the Treasury
Illinois Department of Revenue first in federal-state tax payment pilot
Illinois business taxpayers are the first in the nation to be able to pay state withholding and federal taxes at the same time through a single system, the U.S. Department of the Treasury's Financial Management Service (FMS) and the Illinois Department of Revenue have announced.
Since its inception, EFTPS has processed more than $15 trillion and 630 million electronic transactions. However, most small businesses continue to pay federal withholding taxes by check and Federal Tax Deposit (FTD) coupons. The state of Illinois ranks fifth in the nation in FTD coupon usage, with 1,685,870 coupons processed in calendar year 2005.
The pilot's goal is to encourage even more taxpayers to enroll in and use EFTPS when the service can be used to pay both state withholding and federal taxes. Likewise, Illinois wishes to examine whether making EFTPS available for state taxpayers will improve the efficiency of the state tax collection system. Results of the pilot will be used to help Treasury determine whether to expand this service to other states and to add other state taxes for payment through EFTPS.
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Internal Revenue Service
Tax Calendar - Dates and Actions - January 2007
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Internal Revenue Bulletin 2007-2, January 8, 2007
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Tax filing tips for 2007
Link
New forms and publications
The following documents have been published in the past week:
- 2006 Instructions for Schedule B (Form 1040) Interest and Ordinary Dividends
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Iowa
Employers file Unemployment Insurance forms and payments online
Iowa Workforce Development recently launched a new eFile & Pay system, the Unemployment Insurance Tax System (UITS). UITS allows employers doing business in the State of Iowa to electronically file their quarterly Employer's Contribution & Payroll Report and pay their Unemployment Insurance contributions online.
UITS assists employers by calculating taxable wages and contributions due based on information provided through an interactive, online system. Employers can pay their Unemployment Insurance contributions by eCheck, Credit Card (MasterCard only) or paper check with a payment remittance voucher.
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New Jersey
New withholding requirement for construction contractor services
All persons and businesses, other than governmental entities, homeowners, or tenants, maintaining an office or transacting business in New Jersey and making a payment for services rendered to resident unregistered, unincorporated contractors or non-resident unregistered, unincorporated contractors must deduct and withhold from the payment a tax equal to 7 % of the amount paid.
The purpose is to ensure that the income taxes of resident and non-resident persons engaged in businesses are properly withheld and paid over to the State of New Jersey pending the filing of a New Jersey Gross Income Tax or Partnership Return. The requirement applies to payments made on or after January 1, 2007.
Withholding on the remuneration is not required if the person making the payment has obtained from the person receiving the payment proof of the construction contractor's registration with the Division of Revenue, Department of Treasury.
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6 January 2007
For the latest tax-related news, check out the following links:
Department of Health and Human Services
Child support withholding
An updated version of the publication Working with the Military as an Employer - A Quick Guide is now available
Link
Department of Labor
Puerto Rico security company to pay more than $62,000 in back wages and penalties
H.F. Security Services Corp., a security services business based in San Juan, Puerto Rico, and the company's officers will pay $42,798 in back wages and interest to 126 employees, following a U.S. Labor Department lawsuit alleging violations of the federal Fair Labor Standards Act.
An investigation by the Wage and Hour office found employees were not properly compensated for all the hours they worked, and the employer was not maintaining proper records of employees' hours of work and rates of pay.
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Internal Revenue Service
Tax Calendar - Dates and Actions - January 2007
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Internal Revenue Bulletin 2007-1, January 2, 2007
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Tax filing tips for 2007
Link
New forms and publications
The following documents have been published in the past week:
- Publication 463 Travel, Entertainment, Gift, and Car Expenses
Link
California
Paid family leave
The Paid Family Leave brochure (DE2511), which must be given to every new employee and to those requesting leave, has been revised. It is available in English and a number of other languages.
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Employer's Guide
The 2007 edition of the California Employer's Guide is now available.
Link
Connecticut
Withholding Calculation Rules 2007
Withholding calculation rules and tables for 2007 have been published by the Connecticut Department of Revenue Services.
Link
Mileage reimbursement rate increases
The Workers' Compensation mileage reimbursement rate for all travel expenses incurred on or after January 1, 2007 is now 48.5 cents per mile. This rate change applies to all claimants, regardless of injury date, and coincides with the federal mileage reimbursement rate.
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New York
IRS grants relief for New York storm and flooding victims
The IRS has announced special tax relief for New York State taxpayers in the Presidential Disaster Area struck by severe storms and flooding on November 16-17, 2006.
The disaster area consists of 11 counties: Broome and Chenango.
Deadlines for affected taxpayers to file returns, pay taxes and perform other time-sensitive acts falling on or after November 16, 2006, and on or before February 12, 2007, have been postponed to February 12, 2007.
Beginning January 14, 2007, IRS computer systems will automatically identify taxpayers located in the covered disaster area and apply automatic filing and payment relief. Taxpayers within the covered disaster area no longer need to self-identify by writing on their returns or using the disaster designation in their tax software.
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