New York Wage Theft Protection Act (posted 12/13/2011)
As you know, by February 1, 2012 you will need all your New York employees to sign a document to comply with the New York Wage Theft Protection Act. The new law took effect on April 9, 2011 and imposes more stringent notice and record keeping requirements on New York state employers. More information can be found http://www.labor.ny.gov/workerprotection/laborstandards/workprot/lshmpg.shtm
New York Enacts Tax Reform Legislation – Changes Personal Income and MTA Payroll Tax Rates (posted 12/13/2011)
On December 9, New York Governor Andrew Cuomo signed a tax reform bill into law that will create new personal income tax (PIT) rates and brackets, effective for wages paid on or after January 1, 2012. The New York State Department of Taxation and Finance (DTF) is developing new withholding tables. The new law will also reduce and eliminate the Metropolitan Commuter Transportation Mobility Tax (MCTMT; also known as the MTA Payroll Tax) for certain employers, effective for the quarter beginning on
April 1, 2012 [S.B. 50002, L. 2011; DTF, News Release, 12-12-11].
PIT – new rates and brackets
Effective for wages paid on or after January 1, 2012, there are four new tax brackets. For married couples filing jointly: 6.45% for income over $40,000 up to and including $150,000; 6.65% for income over $150,000 up to and including $300,000; 6.85% for income over $300,000 up to and including $2 million; and 8.82% for income over $2 million.
For heads of household: 6.45% for income over $30,000 up to and including $100,000; 6.65% for income over $100,000 up to and including $250,000; 6.85% for income over $250,000 up to and including $1.5 million; and 8.82% for income over $1.5 million.
For single filers: 6.45% for income over $20,000 up to and including $75,000; 6.65% for income over $75,000 up to and including $200,000; 6.85% for income over $200,000 up to and including $1 million; and 8.82% for income over $1 million.
These rates and brackets (for married couples filing jointly, heads of household, and single filers) expire on December 31, 2014, when the highest rate will return to 6.85% (for married couples earning over $40,000; heads of household earning over $30,000; and single filers earning over $20,000).
Current rates set to expire Dec. 31
These rates replace the current rates, which were set to expire on December 31, 2011. Under the current rates, married couples filing jointly who earned over $40,000 up to and including $300,000 (over $30,000 up to an including $250,000 for heads of household; over $20,000 up to and including $200,000 for single filers) are taxed at a rate of 6.85%. Couples earning over $300,000 up to and including $500,000 are taxed at a rate of 7.85% (over $250,000 up to an including $500,000 for heads of household; over $200,000 up to and including $500,000 for single filers) and joint, head of household, and single filers earning over $500,000 are taxed at a rate of 8.97%. If this legislation had not been enacted, the highest tax rate would have reverted back to 6.85% on January 1, 2012 (see PAYSTATE UPDATE, Issue No. 20, Vol. 13).
MTA Payroll Tax reduced, eliminated for many employers
The MCTMT is imposed on employers engaged in business within the Metropolitan Commuter Transportation District (MCTD). Currently, the tax rate is 0.34% of an employer’s total payroll expense for employees employed within the MCTD (i.e., $0.34 per $100 of wages). Effective April 1, 2012, employers with a payroll expense of $312,500 or less in a calendar quarter will be exempt from the MCTMT. Currently, this threshold is $2,500 in a quarter. Certain educational institutions, including public and private elementary and secondary schools, will also be exempt from the MCTMT, effective April 1, 2012.
Also effective April 1, 2012, the MCTMT rate will be reduced for certain
employers based on their quarterly payroll expense:
- The rate will be 0.11% for employers with a quarterly payroll expense exceeding $312,500 up to and including $375,000; and
- The rate will be 0.23% for employers with a quarterly payroll expense exceeding
$375,000 up to and including $437,500.
- The rate will remain 0.34% for employers with a quarterly payroll expense exceeding $437,500.
Note: This employer-paid payroll tax was enacted in 2009 as part of a bailout plan for the Metropolitan Transportation Authority (MTA), an agency that manages buses, trains, bridges, and tunnels in New York City and surrounding areas (see PAYSTATE UPDATE, Issue No. 10, Vol. 11). The MCTD is comprised of 12 counties served by the MTA, which include the five counties that make up New York City (Bronx, Kings (Brooklyn), New York (Manhattan), Queens, and Richmond (Staten Island)) and the surrounding counties of Dutchess, Nassau, Orange, Putnam, Rockland, Suffolk, and Westchester.
New withholding tables will be released
The DTF has announced that it is developing new state and Yonkers withholding tables that will be effective January 1, 2012. The new tables will reflect changes to the state PIT rates and brackets (which also affect Yonkers) and the state and Yonkers resident supplemental wage tax rates. Currently, the state supplemental wage tax rate is 9.77% and the Yonkers resident supplemental wage tax rate is 1.70975%. When the tables are available, they will be posted to the DTF website at www.tax.ny.gov.
Employees and employers that are struggling with Pennsylvania's Act 32 now have a free online tool to simplify things. (posted 11/23/2011)
Pennsylvania law requires that employees living or working in the state must prepare the new Local Residency Certification Form for their employer. This form includes locality settings and new Political Sub-Division codes and rates. Finding the information is not a simple process.
Symmetry Software, the company behind PaycheckCity.com has released a free online online tool to assist in completing these forms.
The Act 32 Auto-Form is available at www.Payroll-Point.com. The Act 32 Auto-Form automatically fills in the special PSD codes and locality information based on the home and work street addresses.
"This free website gives folks a simple solution to completing a complex tax form....and just in time for the new law going into effect January 1, 2012," said Tom Reahard, CEO of Symmetry Software, the firm who developed the software. Every employer is required to have a Residency Certification Form for each employee on file, according to Reahard.
Visit www.Payroll-Point.com to learn more.
Recruiting for Auto IRA Subcommittee (posted 10.26.2011)
It is estimated that half of American workers will retire with insufficient savings to maintain their preretirement standards of living. It is also estimated that half of employees have no opportunity to save for retirement through their employment. Proposals have been introduced at the federal and state levels to increase the amount of Americans' savings by changing the default from an opt-in system to an opt-out system, through which employees who are unable to save through an employer-provided plan would be automatically enrolled in Individual Retirement Accounts.
Those proposing the plans envision the Auto IRA to be easy to administer and inexpensive, with little actual burden on employers. APA aims to ensure the government understands the employers' perspective on the actual administrative burden, and the subcommittee works toward making any burden as minor as possible while helping the government succeed in this potentially important initiative.
APA’s Government Affairs Task Force Comprises seven subcommittees, listed below. Information on each of these subcommittees is available on our website at www.americanpayroll.org/government.
· Auto IRAs
· Child Support and Garnishment
· Federal Forms & Publications
· SSA Wage Reporting Redesign
APA encourages and welcomes all its members to participate in its various committees. Right now, we are actively recruiting for our Auto IRA Subcommittee.
William Dunn, CPP
Senior Manager of Government Relations
American Payroll Association
IRS updates (posted 8/2011)