The Latest Payroll Tax and Compliance Updates

06/05/18 | 7:00AM | Posted by Nina De Forge

CATEGORIES: News

Responses to TCJA, Minimum Wage Increases and Maximum Contribution Changes

 

 

It was another busy quarter in the payroll and compliance realm. Listed below are some of the key payroll tax and compliance updates from March, April and May that could impact your business. TEAM is dedicated to ensuring our software solutions meet the ever-changing compliance needs of our customers. While we’re committed to keeping you informed, it’s important to do your own research, and consult your own legal and tax advisors when necessary, too.

Federal

2019 Maximum Contributions

The Internal Revenue Service (IRS) has announced the 2019 maximum contribution levels for health savings accounts (HSAs) and out-of-pocket spending limits and deductible minimums for High Deductible Health Plans (HDHPs) that must be used in conjunction with HSAs.

Federal and State Responses to The Tax Cuts and Job Act (TCJA)

  • The IRS urges two-income families and those who work multiple jobs to complete a “paycheck checkup” to verify they are having the right amount of tax withheld from their paychecks.
  • The U.S. Department of the Treasury and the IRS issued a notice stating that proposed regulations will be issued addressing the deductibility of state and local tax payments for federal income tax purposes.
  • The IRS announced relief for taxpayers with family coverage under an HDHP who contribute to an HSA.
  • The IRS described the new information reporting requirements for certain life insurance contracts under new IRC 6050Y, which was added by the TCJA.
  • TCJA changed some laws regarding depreciation deductions. Learn more about the new rules and limitations for depreciation and expensing under the TCJA.
  • The IRS has updated the tax year 2018 annual inflation adjustments to reflect changes from the TCJA. The tax year 2018 adjustments are generally used on tax returns filed in 2019.
  • The Treasury Department and the IRS issued Notice 2018-28, which provides guidance for computing the business interest expense limitation under the TCJA.

State/Local Changes

Oklahoma

If changes to Oklahoma withholding should be made, or employment begins after February 28, 2018, employees need to submit a completed Oklahoma Form W-4 to their employer.

Kentucky

Kentucky changes 2018 tax rate on taxable income.

Idaho

Effective retroactively for wages paid on or after January 1, 2018, the Idaho State Tax Commission has issued revised wage-bracket and percentage method withholding tables and information for employers. Although the new tables are effective from January 1, employers don’t need to adjust employees’ withholding for the months before the new tables were published.

Utah

Effective for wages paid on or after May 1, 2018, the Utah State Tax Commission has revised the wage-bracket and percentage method withholding tables (withholding schedules) for employers.

Colorado

Effective for wages paid on or after April 1, 2018, the Colorado Department of Revenue (DOR) has revised the wage-bracket and percentage method withholding tables.

Oregon

Effective July 1, 2018, employers must begin withholding the new Oregon statewide transit tax from the wages of Oregon residents (regardless of where the work is performed, provided the employer has nexus) and the wages of nonresidents who perform services in Oregon. It’s important to note, this tax is not related to the Lane or TriMet transit payroll taxes.

Department of Labor

New Jersey Gov. Phil Murphy has signed a bill into law requiring employers to provide paid sick leave. The law will take effect on October 29, 2018, and will be enforced by the New Jersey Department of Labor and Workforce Development.

Minimum Wage Changes in 2018

Eighteen states began the new year with higher minimum wages. Eight states (Alaska, Florida, Minnesota, Missouri, Montana, New Jersey, Ohio and South Dakota) automatically increased their rates based on the cost of living, while eleven states (Arizona, California, Colorado, Hawaii, Maine, Michigan, New York, Rhode Island, Vermont and Washington) increased their rates due to previously approved legislation or ballot initiatives.

ICE Planning Surge of I-9 Audits this Summer

Immigration and Customs Enforcement (ICE) is planning a nationwide increase of Form I-9 audits this summer.

Derek Benner, acting executive associate director for ICE’s Homeland Security Investigations, told The Associated Press that in addition to the plans for this summer, the agency will continue to focus on criminal cases against employers and deporting employees who are in the country illegally.

ICE has already opened more worksite investigations seven months into fiscal year 2018 than the agency completed in all of fiscal year 2017. You can read more at the Society for Human Resource Management.

Multi-State Taxation

Employees who travel outside their states of residence for business purposes are potentially subject to filing an income tax return in every other state into which they traveled, even if they were there for only one day. These employees and their employers are forced to comply with a patchwork of confusing, outdated and sometimes predatory nonresident state income tax laws.

The American Payroll Association (APA) is part of the Mobile Workforce Coalition, a group that is pushing for passage of the Mobile Workforce State Income Tax Simplification Act (H.R. 1393, S. 540), a bill with bipartisan support in the House and Senate. These bills would establish a 30-day threshold before a state could impose tax on a nonresident employee’s wages. The legislation has been introduced a number of times since 2006. As part of APA’s support, it has submitted statements and urged lawmakers to vote for its passage. You can read more at APA.

Nina De Forge

Nina joined the team in 2017 and is the Compliance and Payroll Product Owner. Nina, also known as “9,” has been working with human resources, payroll and tax compliance since the 1980s and has a broad range of experience across each discipline. She is an active member of many industry organizations, including the IRS Information Reporting Advisory Committee and its Nationwide E-Filer’s National Focus Group, the Canadian Payroll Association, the Society for Human Resource Management and the International Association for Human Resource Information Management. She is a published author in the book American Payroll Association Basic Guide to Payroll. Outside of her career work, Nina is a hobby photographer.