NACHA Approves Same Day ACH Settlement Proposal Supported by APA

The
Compliance
Publication
of the
American
Payroll
Association
Volume 23
Issue # 6
June 5, 2015
Inside this issue...

Capitol Hill Update . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
IRS Says Criminals Accessed 100,000 Tax Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
U.S. Supreme Court Decision on Maryland Double Taxation Does Not Affect Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
IRPAC Proposal for De Minimis Dollar Threshold for Form 1099 Corrections Gains Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Penalties for Late Payment of Final Wages Under California Law Are Not Wages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
TIGTA Says IRS Employment Tax Fraud Protections Need Improvement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
OCSE Updates and Reminders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
USCIS Offers On-Demand I-9, E-Verify Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
IRS Announces HSA Limits for 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
DOL-RI Agree to Reduce Misclassification of Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
IRS Posts More Q&As on ACA Information Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
CEO Sentenced to Prison for Failure to Pay Employment Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
IRS Updates List of Designated Private Delivery Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ACA Tax Tips for Small Employers Stress Importance of Properly Calculating Workforce Size . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
IT Service Desk Staff Were Not Exempt Administrative Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
State and Local News . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
NACHA Approves Same Day ACH Settlement Proposal Supported by APA
n May 19, NACHA The Electronic Payments

Association announced that its voting membership
has approved Same Day ACH, an amendment to the
NACHA Operating Rules to move payments faster [NACHA
Press Release, 5-19-15; https://www.nacha.org/news/
nacha-membership-approves-same-day-ach].
APA was involved in the process
Survey. Before the proposal was released, a joint
NACHA-APA survey of APA members found that: More than
90% of respondents indicated that same day ACH would
help them in meeting their payroll needs. In addition, more
than 86% confirmed that same day ACH capabilities would
benefit their organizations beyond payroll functions (see
Inside Washington for March).
Comments. After the proposal was released, the APAs
Electronic Payments Committee submitted comments. The
committee expressed support for same day settlement of
ACH transactions and noted that there are certain payroll
transactions that employers may especially appreciate being
able to process on a same day basis. These transactions
include offcycle direct deposits, termination pay, and
remittance of tax payments on the due date (see http://
info.americanpayroll.org/pdfs/gov/ElecPay-same-day.pdf ).
Same Day ACH

Significant use cases. Among the significant use cases
for Same Day ACH, NACHA lists the following:
Same day payrolls, supporting business needs to
pay hourly workers, and providing flexibility for late and
emergency payrolls and missed deadlines; and enabling
employees to have faster access to their pay in these cases;
Business to-business payments, enabling faster
settlement of invoice payments between trading partners,
and including remittance information with the payments;
Expedited bill payments using both ACH credits and
debits, enabling consumers to make on-time bill payments
on due dates, and providing faster crediting for late
payments; and
Account-to-account transfers, providing faster crediting
for consumers who move money among various accounts
they own.
Major provisions. Currently, ACH payments are settled
on the next business day. NACHAs amended rule adds two
new same day settlement windows to the ACH Network,
increasing the movement of funds between financial
institutions from once each day to three times each day:
A morning submission deadline at 10:30 a.m. ET
The Compliance Publication of the American Payroll Association
2 | Payroll Currently
June 5, 2015 Volume # 23 Issue # 6
(original proposal was 10:00), with settlement occurring at

1:00 p.m. ET (original proposal was 12:00). Note: This will be
effective in Phase 1 (original proposal was Phase 3).
An afternoon submission deadline at 3:00 p.m. ET,
with settlement occurring at 5:00 p.m. ET.
The rule also requires that all Receiving Depository
Financial Institutions (RDFIs) receive same-day transactions
and provide faster funds availability to customers. For
example, RDFIs will have to make funds available from
same-day ACH credits (such as payroll direct deposits) to
their depositors by 5:00 p.m. at the RDFIs local time.
A Same Day Entry fee is established as a mechanism
for RDFIs to recover some of their costs for enabling
and supporting mandatory receipt of same day ACH
transactions. Note: The estimated fee is 5.2 cents for each
same day transaction (original proposal was 8.2 cents).
Only international transactions (IATs) and high-value
transactions above $25,000 will not be eligible for same-day
processing. NACHA said such transactions account for only
about 1% of current ACH network volume.
Effective dates. The amended rule will become

effective in three phases:
In Phase 1, effective September 23, 2016 (original
proposal was September 16), ACH credit transactions will be
eligible for same-day processing at 10:30 a.m. and 3:00 p.m.
ET supporting use cases such as hourly payroll, person-toperson payments, and same day bill pay.
In Phase 2, effective September 15, 2017, same-day
ACH debits will be added, allowing for a wide variety of
consumer bill payment use cases like utility, mortgage, loan,
and credit card payments
Phase 3, effective March 16, 2018, will introduce faster
ACH credit funds availability requirements for RDFIs; funds
from Same Day ACH credit transactions will need to be
available to customers by 5:00 p.m. RDFI local time.
For more information, see https://www.nacha.org/
rules/same-day-ach-moving-payments-faster.
Capitol Hill Update
he following are some of the payroll-related bills

introduced in the 114th Congress (2015-2016) from
March-May 2015. No formal action has been taken on any
of the bills discussed here, unless otherwise noted.
Unemployment insurance
Quarterly wage reporting. On February 12, the House
passed H.R. 644. On May 14, the Senate substituted the
contents of a different bill (S. 1269) and passed reformulated
H.R. 644 as the Trade Facilitation and Trade Enforcement Act.
Section 913 of the Senate version of the bill is a provision
on collection of occupational data in employer filings
for unemployment insurance that would expand the
nationwide collection of labor statistics by (1) requiring each
quarterly wage report required to be filed after January 1,
2017, to include occupational codes for each employee
using the Standard Occupational Classification (SOC) system;
(2) requiring the state agency receiving this information to
make it available to the Secretary of Labor; and (3) requiring
the Secretary of Labor to make occupational information
submitted available to other state and federal agencies. It is
unclear whether the version of the bill that is finally approved
by both the House and Senate will include this provision.
Note: The SOC system is used by federal agencies that collect
occupational data. It is designed to cover all occupations
in which work is performed for pay or profit, reflecting the
current occupational structure in the United States. The 2010
SOC includes 840 occupations.
State taxation of nonresidents
On May 14, the Mobile Workforce State Income
Tax Simplification Act was introduced in the House as
H.R. 2315. An identical bill was introduced earlier in the Senate
(S. 386; see PAYROLL CURRENTLY, Issue No. 4, Vol. 23). The
proposed legislation would establish a uniform standard for
state taxation of nonresident employees wages. Consistent
with current law, it provides that an employees earnings are

fully taxable in his or her state of residence. In addition, an
employees earnings would be subject to tax in the state(s) in
which the employee is present and performing employment
duties for more than 30 days during the calendar year in
which the income is earned. If enacted, the legislation would
be effective on January 1 of the second year that begins after
the date of enactment.
On May 28, Rep. Mike Bishop (R-Mich.), a co-sponsor
of the bill, announced in a press release that the measure
had gathered more than 250 supporters throughout the
business community [Press Release, 5-28-15; https://
mikebishop.house.gov/media-center/press-releases/
momentum-builds-bishop-s-mobile-workforce-stateincome-tax].
The APA supports this legislation and has lobbied for its
passage for several years (see Inside Washington for June
2014 for details).
Note: Currently, state tax and withholding obligations
for nonresidents are based on the amount earned in the
state, the time spent in the state, or a combination of these
two factors. The administrative burden involved in tracking
workers out-of-state tax withholding obligations is so
cumbersome that it is often ignored. Enforcement is lax in
most states, though New York in particular is recognized as
being aggressive in its collection efforts.
Minimum wage
S. 1150/H.R. 2150, the Raise the Wage Act, would increase
the federal minimum wage by $0.75 to $8 an hour beginning
January 1, 2016, then by $1 a year for the next four years until
it reaches $12 in 2020. Thereafter, the minimum wage would
be indexed to the median wage. The proposal would also
gradually phase out the tipped minimum wage, bringing it
up to equal the minimum wage.
Payroll Currently | 3

Dependent care assistance
S.215/H.R. 1720, the Child and Dependent Care FSA
Enhancement Act, would increase from $5,000 to $7,500
the limitation on the tax exclusion for employer-provided
dependent care assistance and provide for an annual inflation
adjustment after 2016.
Student loan repayment assistance
H.R. 1713, the Student Loan Repayment Assistance Act,
would exclude from an employees gross income amounts
paid by an employer under astudent loan payment assistance
program (a separate written plan) to provide employees with
student loan payment assistance (as defined). Participating
employees would be required to pay at least $50 per month
on their student loans (in addition to the amount excluded
from their gross income under an assistance program). The
amount of the income exclusion would be subject to $6,000
annual/$50,000 lifetime limits.
Health and wellness
Fitness expenses. H.R. 1218, the Personal Health
Investment Today (PHIT) Act, would treat amounts paid for
fitness facility memberships, physical exercise programs, and
exercise equipment as IRC 213 medical care expenses up
to $1,000 ($2,000 for a joint return or a head of household)
per year. Note, therefore, that amounts reimbursed for these
expenses under health flexible spending arrangements,
Archer medical savings accounts, health reimbursement
arrangements, or health savings accounts would not be
income to the taxpayer.
FSA dollar limit. H.R. 2207, the Flexible Spending Account
(FSA) Act, would repeal the dollar limitation on contributions
to health FSAs for taxable years beginning after 2015.
Family and Medical Leave Act (FMLA)
S. 1302/H.R. 2260, the Parental Bereavement Act, would
amend the FMLA to permit leave because of the death of a
son or daughter.
Fair Labor Standards Act (FLSA)
Regular rate of pay. H.R. 1981, the Employee Bonus
Protection Act, would amend the FLSA to provide that an
employees regular pay rate, for purposes of calculating
overtime compensation, will not be affected by additional
payments to reward an employee or group of employees for
meeting or exceeding productivity, quality, efficiency, or sales
goals under a gain sharing, incentive bonus, commission, or
performance contingent bonus plan.
Child labor. S. 974/H.R. 1848, would redefine oppressive
child labor, for purposes of child labor prohibitions, to include
the employment of any employee under age 18 who has
direct contact with tobacco plants or dried tobacco leaves.
Income tax
System overhaul. S. 929/H.R. 1824, the Simplified,
Manageable, And Responsible Tax (SMART) Act would
replace the marginal income tax rates with a single rate of
17% on individual taxable income. Among other things, the
bill would also:
redefine taxable income to mean the amount by
which wages, retirement distributions, and unemployment
compensation exceed the standard deduction;
increase the basic standard deduction and include an

additional standard deduction for dependents;
include in taxable income the taxable income of each
dependent child under the age of 14;
impose a tax of 17% on the value of excludable
compensation provided during the year by an employer for
the benefit of employees and make the employer liable for
the tax;
repeal pension plan rules relating to nondiscrimination,
contribution limits, and restrictions on distributions; and
repeal the alternative minimum tax; all income tax
credits; estate, gift, and generation-skipping transfer taxes;
and income tax provisions (except certain provisions relating
to retirement distributions and tax-exempt organizations).
Regional rates. H.R. 1758, the Tax Equity Act, would
provide for regional cost-of-living adjustments in individual
income tax rates. The bill would direct the U.S. Department
of Labor to determine and publish a regional cost-of-living
index for each metropolitan statistical area for 2014 and each
calendar year thereafter.
Home office deduction. S. 1281/H.R. 2310, the Helping
Our Middle Class Entrepreneurs (HOME) Act, would create
an optional standard home office deduction of the lesser
of $1,500 or the gross income derived from an individuals
trade or business for which such use occurs, for taxable years
beginning after December 31, 2014. The maximum amount
of the deduction would be subject to an annual cost-of-living
adjustment thereafter.
FICA tax
H.R. 1984, the FAIR Social Security Act, would repeal the
cap on compensation subject to FICA tax. Likewise, H.R. 2078,
the Keeping Social Security Solvent Act, would repeal the
limitation on the social security wage base.
Immigration
H.R. 2181, the Stopping Trained in America Ph.D.s from
Leaving the Economy (STAPLE) Act would exempt from: (1)
direct numerical limitations aliens who have earned a Ph.D.
degree in science, technology, engineering, or mathematics
(STEM) from a U.S. institution of higher education and who
have an offer of employment from a U.S. employer in a field
related to such degree; and (2) H-1B visa (specialty occupation)
numerical limitations aliens who have a U.S. STEM Ph.D. and
with respect to whom the petitioning employer requires
such an education.
E-Verify
S. 1032, the Accountability Through Electronic Verification
Act, would permanently reauthorize E-Verify; mandate its
use for critical contractors 30 days after designation by the
Secretary of Homeland Security, for all new hires/recruits/
referrals one year after the date of enactment, and for all
employees not previously verified by the employer through
E-Verify three years after the date of enactment. The bill
would require the Secretary of Homeland Security to submit
and Congress to consider recommendations for modifying,
simplifying, or eliminating the I-9 process. It would also
preempt state and local government authority to prohibit
the use of E-Verify, and would protect an employer that
terminates an individual in good faith reliance on information

provided through E-Verify.
Individual taxpayer identification numbers (ITINs)
S. 1397/H.R. 2478, the ITIN Reform Act, would require
that ITIN applications be submitted in person at taxpayer
assistance centers. In addition, ITINs issued after the date of
enactment would only be valid for five years, or an additional
five years if renewed in person. ITINs issued on or before
the date of enactment would expire three years after the
date of enactment or the first taxable year after the date of
enactment for which no return is filed.
Note: The IRS revised its ITIN program procedures in 2014
(see PAYROLL CURRENTLY, Issue No. 8, Vol. 22). A Treasury
Inspector General for Tax Administration (TIGTA) report
(2015-40-026) based on a review of tax year 2012 tax returns
(i.e., before the IRS program revisions), found that ITINs
were used to file potentially fraudulent tax returns. TIGTA
identified more than 140,000 tax year 2012 tax returns filed
by individuals using an ITIN that had the same characteristics
as IRS-confirmed identity theft tax returns. These tax returns
resulted in the issuance of approximately $375 million in

potentially fraudulent tax refunds. The IRS responded that
it plans to develop an action plan to deactivate ITINs [TIGTA
Press Release, 5-28-15; www.treasury.gov/tigta/press/press_
tigta-2015-16.htm].
Employee misclassification
H.R. 2483, the Independent Contractor Tax Fairness and
Simplification Act, would allow the IRS to issue prospective
guidance clarifying the employment status of individuals for
purposes of employment taxes and to prevent retroactive
assessments with respect to such clarifications. This law
would repeal the prohibition on issuing such guidance in
Section 530 of the Revenue Act of 1978.
Work Opportunity Tax Credit (WOTC)
H.R. 1803, the Veterans Back to Work Act, would: (1) make
permanent the WOTC for hiring qualified veterans (veterans
receiving compensation for a service-connected disability and
other federal assistance), and (2) allow employers that hire
qualified veterans an exemption from employment and railroad
retirement taxes for such veterans first-year wages.
IRS Says Criminals Accessed 100,000 Tax Accounts
n May 26, the IRS announced that criminals using

taxpayer-specific data acquired from non-IRS
sources had gained unauthorized access to information
on approximately 100,000 tax accounts through the Get
Transcript application [IRS Statement, 5-26-15; www.irs.
gov/uac/Newsroom/IRS-Statement-on-the-Get-TranscriptApplication]. The IRS emphasizes that this incident involved
one application it did not involve the main computer
system that handles tax filing submissions or other
applications. Note: The IRS has posted 12 Questions and
Answers (Q&As) on its website for those who want more
information about the Get Transcript application [Q&As,
5-27-15; www.irs.gov/uac/Newsroom/Get-TranscriptApplication-Questions-and-Answers].
What happened
Questionable attempts detected. In mid-May,
questionable attempts were detected on the Get Transcript
application. Following an initial review, the IRS said that
unauthorized third parties had gained access to more than
100,000 accounts through the application. A further review
determined that the attempts were quite complex in nature
and appear to have started in February and run through
mid-May. In all, about 200,000 attempts were made from
questionable email domains, with more than 100,000 of
those attempts successfully clearing authentication hurdles.
The IRS points out that during this filing season, taxpayers
successfully and safely downloaded a total of approximately
23 million transcripts.
Outside-source
information
used
to
clear
authentication process. In this sophisticated effort, the
third parties gained information from an outside source
before trying to access the IRS site. They then succeeded in
clearing a multi-step authentication process that required
prior personal knowledge about the taxpayer including
social security information, date of birth, tax filing status, and

street address before accessing IRS systems. The multi-layer
process also requires an additional step, where applicants
must correctly answer several personal identity verification
questions that typically are only known by the taxpayer.
IRS responds
Application temporarily shut down. The IRS has
temporarily shut down the Get Transcript application. The
online application will remain disabled until the IRS makes
modifications and further strengthens security for it.
Investigation is ongoing. The matter is under review by
the Treasury Inspector General for Tax Administration as well
as the IRS Criminal Investigation unit.
IRS acts to protect taxpayers
The IRS advises that it has taken a number of steps to
protect affected taxpayers, and that no action is needed by
taxpayers outside the groups identified here.
Notification letter. The IRS is sending a letter to all of the
approximately 200,000 taxpayers whose accounts were the
subject of attempts at unauthorized access, notifying them
that third parties appear to have had access to taxpayer
social security numbers and additional personal financial
information from a non-IRS source before attempting to
access the IRS transcript application.
Although half of this group did not actually have their
transcript account accessed because the third parties failed
the authentication tests, the IRS is still taking an additional
protective step to alert taxpayers because malicious actors
acquired sensitive financial information from a source outside
the IRS about these households that led to the attempts to
access the transcript application.
The letters were mailed out starting at the end of May
and include additional details.
Note that these outreach letters do not request any

personal identification information from taxpayers.
Free credit monitoring. The IRS is offering free credit
monitoring for the approximately 100,000 taxpayers
whose Get Transcript accounts were accessed to ensure
this information is not being used through other financial
avenues. Taxpayers will receive specific instructions so they
can sign up for the credit monitoring.
Looking ahead
The IRS is flagging the underlying taxpayer accounts on
U.S. Supreme Court Decision on Maryland Double Taxation

Does Not Affect Withholding
he U.S. Supreme Court has ruled that Marylands

personal income tax (PIT ) scheme violates the
Commerce Clause of the U.S. Constitution [Comptroller of
Treasury of Md. v. Wynne, No. 13-485 (U.S. Sup. Ct., 5-18-15)].
The Court said the Maryland State Comptrollers practice of
allowing taxpayers a PIT credit against their state income
tax for income earned in another state but not their
county income tax unconstitutionally interferes with
interstate commerce by discriminating against it. Note:
The decision does not affect Maryland state and county
income tax withholding. PIT refunds will not be handled by
employers.
No PIT credit against county tax
Maryland has a state income tax and county income
taxes (both collected by the State Comptroller). Residents
who pay income tax to another jurisdiction for income
earned in that other jurisdiction are allowed a credit against
state tax but not county tax. Maryland residents Brian
and Karen Wynne earned income from an investment in a
corporation which made money in several different states.
The couple claimed an income tax credit on their Maryland
returns for taxes paid to other states. Maryland allowed a
credit against the Wynnes state income taxes, but not their
county income taxes.
Tax scheme violates Commerce Clause
The Court held that Marylands tax scheme violates
the Commerce Clause of the U.S. Constitution. By denying
its core processing system to monitor for potential identity

theft to protect taxpayers going forward, both now and in
2016.
The IRS is also conducting further reviews of the cases
where the transcript application was accessed, including how
many of these households filed taxes in 2015. It is possible
that some of these transcript access attempts were made
with an eye toward using them for identity theft purposes
during next years tax season.
the credit for county income taxes, some of the income

earned by Maryland residents outside the state is taxed
twice. According to the Court, this creates an incentive for
taxpayers to opt for intrastate (within one state) rather than
interstate (between two or more different states) economic
activity.
No effect on withholding taxes
At the present time, this ruling does not affect
Maryland state and county income tax withholding. Payroll
professionals should continue to withhold Maryland state
and county income taxes as they normally would, at the
regular rates. The ruling is concerned only with an income
tax credit that taxpayers can claim on their PIT returns,
including amended returns for prior years that are still
within the statute of limitations.
PIT refunds will be handled at the state level
Because Maryland county taxes are administered and
collected by the state, county income tax refunds will be
handled at the state level. Some counties, anticipating
the ruling, have established reserves to cover the cost of
refunds. According to published news reports, the State
Comptroller will have to review more than 8,000 protective
claims for refunds. The refunds are expected to be issued
later this year. Because the ruling does not affect the
withholding side of county income taxes, refunds will not
be administered by employers.
IRPAC Proposal for De Minimis Dollar Threshold for

Form 1099 Corrections Gains Support
he IRSs Information Reporting Program Advisory

Committee (IRPAC) held its annual public meeting on
October 29, 2014. As reported in PAYROLL CURRENTLY
(see Issue No. 11, Vol. 22), the Burden Reduction Subgroup
report recommended creating a safe harbor to provide
that no penalty will apply for failure to correct net changes
of $50 or less in the reported amount to reduce the
administrative burden for information return filers,
taxpayers, and the IRS.
On April 20, 2015, the Securities Industry and Financial
Markets Association (SIFMA) chimed in to provide its support
of IRPACs recommendation in a letter to the Assistant
Secretary for Tax Policy, U.S. Department of the Treasury,
and the Chief Counsel of the IRS Office of the Chief Counsel.
SIFMA requested the creation of a de minimis dollar
threshold for Form 1099 corrections to reduce reporting
and cost burdens for both taxpayers filing corrections and
the IRS processing them [SIFMA Letter, 4-20-15; www.sifma.
org/issues/item.aspx?id=8589954303]. Note: SIFMA is the
voice of the U.S. securities industry, representing brokerdealers, banks, and asset managers.
Under SIFMAs threshold request, a corrected Form
1099-MISC would not be required to be issued as a result
of an amount in any given box changing by $50 or less.
Payers would aggregate all changes per box until the $50
threshold is reached. When the threshold is reached within
any one box, it would trigger reporting on the entire form.

Note: SIFMA said the creation of a de minimis threshold
should not preclude the issuance of a correction.
Echoing recommendations made previously by
IRPACs Burden Reduction Subgroup, SIFMA specifically
recommended that a failure to correct a de minimis amount
of $50 or less previously reported to the IRS should be defined
in Treas. Reg. 301.6721-1(c) and 301.6722-1(b) as an
inconsequential error not subject to the penalty provisions
of IRC 6721 and 6722.
It has been suggested that the IRS lacks statutory
authority to establish a de minimis threshold. SIFMA
pointed out, however, that there are other instances where

the Treasury Department has established a de minimis rule
by regulation in the interest of sound tax administration,
and cited several examples. Therefore, we would posit that
the Secretary has sufficient authority to promulgate a de
minimis exception in this case.
The creation of this safe harbor for de minimis
amounts would offer taxpayers, filers, and the IRS relief
from the burden and cost of processing such immaterial
amounts. The cost to taxpayers filing amended returns
will often exceed the amount of taxes due to or owed by
the taxpayer.
Penalties for Late Payment of Final Wages Under California Law

Are Not Wages
he IRS Office of Chief Counsel has released a

memorandum advising that late payment penalties
an employer is required to make under California law
to terminated or quitting employees are not wages for
FICA, FUTA, and federal income tax withholding purposes
[ILM 201522004, release date 5-29-15; www.irs.gov/pub/
irs-wd/201522004.pdf ].
Californias late payment penalty
California Labor Code 203 provides for a late payment
penalty (also referred to as the waiting time penalty) where
an employer willfully fails to pay, in accordance with
the due dates provided under state law, any wages of an
employee who is discharged or who quits. The California
Department of Industrial Relations (DIR) explains that the
penalty does not apply if there is a good faith dispute
whether the wages are due.
The DIR further explains that 203 does not require
that the employer intended the action or anything
blameworthy, but rather that the employer knows what
he is doing, that the action occurred and is within the
employers control, and that the employer fails to perform
a required act.
The penalty period. Under 203, if the late payment
penalty applies, the wages of the employee shall continue
as a penalty from the due date . . . [of the final paycheck]
at the same rate until paid or until an action therefor is
commenced; but the wages shall not continue for more
than 30 days.
Daily rate of pay. The penalty under 203 is based
on the employees daily rate of pay and is calculated by
multiplying the daily wage (average wage on working
days) by the number of days that the employee was not
paid, up to a maximum of 30 days. The 30-day period is
calendar days, and includes weekends and holidays and
any other days that the employee would not normally
work.
State views on wage status of 203 penalty
The DIR website states that payment of the late
payment penalty is not wages and that no deductions are
taken from the penalty payment.
The Supreme Court of California has held that the
203 late payment penalty may not be recovered as

restitution under the state Unfair Competition Law (UCL)
in contrast to unpaid wages that give rise to the penalty
(Pineda v. Bank of America, 241 P.3d 870 (2010)).
Wages under the IRC
Statutory provisions. IRC 3101 and 3111 impose
FICA taxes on wages. The term wages is defined in
3121(a) for FICA purposes as all remuneration for
employment. Employment is defined in 3121(b) as any
service, of whatever nature, performed by an employee
for the person employing him, with certain specific
exceptions.
FUTA tax is imposed on employers by 3301.
The general definitions of the terms wages and
employment for FUTA purposes are similar to the
definitions for FICA purposes.
IRC 3402(a), relating to income tax withholding,
generally requires every employer making a payment
of wages to deduct and withhold upon those wages a
tax determined in accordance with prescribed tables or
computational procedures. The term wages is defined in
3401(a) for federal income tax withholding purposes as
all remuneration for services performed by an employee
for his employer.
IRS regulations. For FICA purposes, the regulations
define employment as including services performed
by an employee for an employer. For FUTA purposes,
services performed within the United States by an
employee for the person employing him constitute
employment.
What if the employer-employee relationship no longer
exists?
Under IRS regulations applicable to FICA, FUTA,
and income tax withholding, remuneration for services
constitutes wages even though at the time paid the
relationship of employer and employee no longer exists.
Severance pay. In U.S. v. Quality Stores, Inc. (see
PAYROLL CURRENTLY, Issue No. 4, Vol. 22), the U.S.
Supreme Court held that severance payments made
to employees who were involuntarily terminated were
wages for FICA purposes.

Terms and conditions of employment. Rev. Rul. 2004-110
(2004-50 IRB 960) holds that an amount paid to an employee
as consideration for cancelling an employment contract and
relinquishing contract rights is ordinary income and wages for
purposes of FICA, FUTA, and federal income tax withholding.
The revenue ruling holds that employment for purposes of
FICA, FUTA, and federal income tax withholding encompasses
the establishment, maintenance, furtherance, alteration, or
cancellation of the employer-employee relationship or any of
the terms and conditions thereof.
Unpaid wages and liquidated damages. Rev. Rul.
72-268 (1972-1 CB 313) concerns the employment tax status
of payments for previously unpaid minimum wages, unpaid
overtime compensation, and liquidated damages under
the Fair Labor Standards Act (FLSA) and the Walsh-Healy
Government Contracts Act. Liquidated damages equal to the
amount of the unpaid minimum wages or unpaid overtime
compensation recovered are payable under the FLSA unless
the employer shows that it was acting in good faith and that
it had reasonable grounds for believing that it was not acting
in violation of the FLSA. Generally, the liquidated damages are
paid directly to the affected employees.
The revenue ruling holds that since the payments of
unpaid minimum wages and unpaid overtime compensation
are remuneration for employment, the payments are wages
for FICA, FUTA, and federal income tax withholding purposes,
whether the amounts are paid as a result of a judgment of
a court or in accordance with a settlement reached by the
parties involved. The ruling further holds that since payments
representing liquidated damages made by an employer to
its employees pursuant to the FLSA are not remuneration for
employment, they are not wages for federal employment tax
purposes. However, they are includible in the gross income of
the employee.
Californias late payment penalty is not wages
Not severance pay. The late payment penalty in this
case is different from severance pay because it is based on
the employers failure to pay final wages on a timely basis. It
is imposed by state law because of the employers action or
inaction with respect to the final paycheck. The employee has
no right to payment of the late payment penalty based on the
service of the employee; it only applies if the employer fails to
pay wages on a timely basis.

Not part of the terms and conditions of employment.
The payment of the late payment penalty also does not
satisfy the definition of wages in Rev. Rul. 2004-110 because
the penalty is not part of the terms and conditions of
employment, but a separate statutorily imposed penalty.
Note: Many legally mandated benefits are wages for
employment tax purposes. The distinguishing factor here is
that the late payment penalty is a state-imposed penalty on
the employer for its action.
Not based on employee services. The late payment
penalty is similar to the liquidated damages in Rev. Rul. 72-268
that were held not to be wages for employment tax purposes.
The late payment penalty is a statutorily-imposed penalty
for employer misconduct that is additional to the employees
wages. The penalty varies in amount based on the extent of
the employers misconduct (i.e., the number of days that the
employer fails to pay the wages after the due date) rather
than the level of services performed by the employee, and is
not a substitute for the employers liability for the payment of
wages. Note: Because the penalty is based on calendar days
rather than work days, the penalty amount is not the same as
the amount of wages the employee would have received if
still working during the period the penalty is imposed.
Note on meal and rest period payments
The IRS advises that its conclusion about the late
payment penalty under California Labor Code 203 only
applies to that penalty. It does not apply to meal and rest
period payments under Labor Code 226.7. Under that
provision, if an employer fails to provide an employee a meal
or rest period in accordance with state requirements, the
employer must pay the employee one additional hour of pay
at the employees regular rate of compensation for each day
that the meal or rest period is not provided. Because meal and
rest period payments are essentially additional compensation
for the employee performing additional services during the
period when the meal and rest periods should have been
provided, the IRS says it appears those payments would be
wages for federal employment tax purposes.
TIGTA Says IRS Employment Tax Fraud Protections Need Improvement

based on an article in Accounting Today by James Paille, CPP, Director of Operations for
myPay Solutions at Thomson Reuters and APA President-elect
n a recently issued report, the Treasury Inspector General

for Tax Administration (TIGTA) presented the results
of a review of IRS controls currently in place to protect
taxpayer (employer) and government interests when
third-party payroll providers are not compliant with
payment and filing requirements i.e., when they collect
tax amounts from clients but do not remit them [TIGTA
Audit Report No. 2015-40-023, 3-2-15; www.treasury.
gov/tigta/auditreports/2015reports/201540023fr.pdf ].
The report concluded that improvements are needed
to safeguard and protect employers that use payroll

providers.
Background
Third-party payer arrangements usually work as
intended; however, there have been instances in which
third-party payers receive funds from employers for
payment of payroll taxes, but they have not remitted
those taxes to the IRS. This causes significant problems for
employers because the funds have been expended but
the taxes are still due.
Most common types of third-party payroll providers

TIGTAs report focuses on four types of third-party
providers:
Payroll Service Provider (PSP) A PSP typically prepares
employment tax returns for the employer and processes
the withholding, deposit, and payment of associated
employment taxes. Returns are signed by the employer and
filed under the employers employer identification number
(EIN). Taxes are paid under the employers EIN. The employer
is solely liable for timely filing and payment of tax.
Reporting Agent A Reporting Agent is a type of PSP. An
employer and a third party file Form 8655, Reporting Agent
Authorization, with the IRS to designate a PSP as a Reporting
Agent. An employer may authorize a Reporting Agent to
sign and file certain tax returns. Returns are then signed by
the Reporting Agent and filed under the employers EIN. The
Reporting Agent files separate employment tax returns for
each employer and may also deposit and pay taxes on the
employers behalf. The employer is solely liable for timely
filing and payment of taxes.
Section 3504 Agent An employer and a third party file
Form 2678, Employer/Payer Appointment of Agent, with the
IRS to authorize the third party as a Section 3504 Agent of
the employer. Under IRC 3504, an agent performs acts such
as withholding, reporting, and paying of employment taxes.
An aggregate return is filed under the Section 3504 Agents
EIN for all employers using the agent, and the aggregate tax
is likewise paid under the Section 3504 Agents EIN. Both the
employer and the Section 3504 Agent are liable for timely
filing and payment of taxes.
Professional Employer Organization (PEO) A PEO,
sometimes referred to as an employee leasing organization,
enters into an agreement with an employer to perform some
or all of the employment tax withholding, reporting, and
payment activities related to workers performing services for
the employer. An aggregate return is filed under the PEOs
EIN for all employers using the PEO, and the aggregate tax
is likewise paid under the PEOs EIN. The employer is solely
liable for timely filing and payment of taxes. However, the IRS
is under a congressional mandate to create a certified PEO
program that would allow PEOs voluntarily participating in
the program to accept employment tax liability for its clients
beginning in 2016.
Processes have not been established to link employers
with all types of third-party payers
Reporting Agents and Section 3504 Agents. The IRS
requires that Reporting Agents and Section 3504 Agents
submit authorization forms disclosing the relationship
between an employer and a third-party payer.
TIGTAs auditors found that authorization information on
Forms 8655 differed from the information in the IRSs systems
in 13% of the cases reviewed.
Auditors also found that Form 2678 indicators (employer
or Section 3504 Agent) were erroneously captured/input
in 17% of the cases reviewed. In these cases, the employer
was erroneously identified as the Section 3504 Agent or vice
versa.
REPORTING AGENTS AND REVENUE PROCEDURE

2012-32 Revenue Procedure 2012-32 (see PAYROLL
CURRENTLY, Issue No. 8, Vol. 20) requires Reporting Agents
to (1) notify employers in writing on at least a quarterly
basis that Form 8655 does not eliminate the taxpayers
liability for the failure to file employment tax returns or
remit employment taxes, and (2) use EFTPS or the Federal
Tax Application for employer tax deposits and payments.
Upon receiving a disclosure statement, an employer can
immediately verify that a Reporting Agent is making tax
deposits and payments timely on its behalf.
PSPs and PEOs. The IRS does not require an
authorization form for PSPs, nor does the IRS track or
document the relationships between the PSPs and the
employers they represent.
Although the IRS does not have a way to link employers
with a PSP, the risk of an employer not being aware of filing
or payment improprieties on the part of the PSP is not
as significant as it is for those employers that enter into a
relationship with a PEO because when an employer uses
the services of a PSP, its employment taxes are filed and paid
under its own EIN.
The IRS is developing processes and procedures to
link a PSP to an employer through the Electronic Federal
Tax Payment System (EFTPS), though an implementation
date has not been set. The plan is to develop programming
within EFTPS that will link a PSP to an employer after the
enrollment process is successfully completed by the PSP.
This information will be verified against the IRSs tax records.
Once the employer is verified as legitimate, the PSP will
receive approval to use EFTPS.
An employer that uses the services of a PEO, on the
other hand, is not associated with the tax returns and
payments that a PEO makes on its behalf. The IRS also
does not require a PEO to submit an authorization form
disclosing the employers for whom it provides tax filing
and employment tax payment services. The IRS is therefore
unable to link employers with PEOs.
RECENTLY ENACTED LEGISLATION WILL ENSURE
THAT EMPLOYERS ARE NOTIFIED OF ADDRESS
CHANGES Congress, recognizing the risk of potential
improprieties when an employers address is changed (i.e.,
replaced with the address of the Reporting Agent) recently
passed legislation requiring the IRS to notify employers of
address changes. The Consolidated and Further Continuing
Appropriations Act, 2015 (see PAYROLL CURRENTLY, Issue
No. 1, Vol. 23) includes a provision directing the IRS to issue
a notice of confirmation of any address change relating to
an employer making employment tax payments and to
send such notice to both the employers former and new
address (see PAYROLL CURRENTLY, Issue No. 2, Vol. 22,
Capitol Hill Update, which notes a similar provision in the
Consolidated Appropriations Act, 2014). TIGTA reports that
the IRS began issuing the dual notices in January 2015.
Processes are needed to link third-party payers to
employers
TIGTA concluded by making five recommendations:

Recommendation. Develop a formal plan for
implementing the process to use EFTPS to link PSPs with the
employers that use their services.
IRS response. The IRS will determine whether it has the
resources to implement such a process and, if so, will work
with the Bureau of the Fiscal Service (the owner of EFTPS)
to develop a formal implementation plan.
Recommendation. Establish a program in which
employers can inform the IRS of the PEOs that they
authorize/designate for filing and payment of employment
taxes (similar to the procedures for those employers using
the services of a Reporting Agent and Section 3504 Agent).
Once in place, ensure that tax account records are updated
to reflect this information.
IRS response. The IRS is working to establish the
voluntary certification program that was enacted as part
of the Tax Increase and Prevention Act of 2014 (TIPA; see
PAYROLL CURRENTLY, Issue No. 1, Vol. 23). The IRS does
not currently have the resources to establish a compliance
program outside the scope of TIPA, i.e., for PEOs that choose
not to be certified.
Recommendation. Require PEOs with a service
agreement to attach a Schedule R (Form 941) to their Form
941 tax return listing the employers on whose behalf the
PEOs are filing.
IRS response. TIPA does not address any reporting or
recordkeeping requirements for PEOs that do not become
certified PEOs. The IRS does not have the authority or ability
to require PEOs to attach a Schedule R (Form 941) to their
Form 941 tax return listing the employers on whose behalf
they are filing.
Recommendation. Develop processes and procedures
to ensure that Form 8655 authorization information
captured in the IRSs systems is accurate, and correct the
errors associated with the Forms 8655 identified in this audit.
IRS response. The IRS issued an alert on December
4, 2014, to reinforce the procedural requirements for
processing Form 8655 and explore changes that may result
in improved accuracy of posted data. The errors identified
have been corrected.
Recommendation. Develop processes and procedures
to ensure that employees processing Forms 2678 accurately
assign indicators, and correct the errors identified in this
audit.
IRS response. The IRS issued an alert on November
4, 2014, to reinforce the procedural requirements for
processing Form 2678. The errors identified have been
corrected.
ACTIVITY AT THE STATE LEVEL Maine is the only
state that requires payroll processors to be licensed and
bonded (see Inside Washington for May 2007: After one
bonding law was enacted, some service providers that
couldnt qualify for the bonding amount complained, and
the legislature passed another law with a lower amount.
After more complaints, they enacted a third law with an
even lower bond amount and made the state the bonding
agency of last resort for those providers that could not
qualify for the required bond on the open market. So, Maine
permits virtually anyone to qualify as a state-sanctioned
payroll processor.). A Maryland commission looking at
the issue recently concluded that it would not support
bonding, licensing, or registration requirements for payroll
service providers (see Inside Washington for February
2014).
Make a complaint about a tax return preparer
If you have been financially impacted by a tax return
preparers misconduct or improper tax preparation
practices, you can report it to the IRS on Form 14157,
Complaint: Tax Return Preparer [IRS e-News for Small
Businesses, 5-4-15; www.irs.gov/Tax-Professionals/
Make -a- Complaint-About-a-Tax-Return-Preparer].
Complaints related to employment taxes may include any or
all of the following:
Theft of refund. A preparer:
- Embezzled or stole all or a portion of a clients federal
tax refund.
- Diverted a refund to an account that was not the
clients.
- Provided a copy of the return to the client that does
not match the return that was filed with the IRS.
Preparer misconduct. A preparer:
- Did not provide client with a copy of the return, and
refused to provide a copy after a request.
- Did not return some or all of the clients original
records.
- Did not sign the return.
- Claimed to be an attorney, certified public accountant,
enrolled agent, or registered tax return preparer, but does
not actually have the credential claimed or the credential is
no longer valid (e.g., expired, suspended, or revoked).
- Agreed to file a return but did not.
- Charged for services not performed.
- Did not remit payment for taxes due.
- Filed a return or submitted other information for a
client without the clients knowledge, authorization, or
consent.
- Was misleading, or failed to ensure taxpayers
understood financial products and related fees.
Employment taxes. A preparer:
- Did not remit employment tax funds to the IRS on
behalf of a client for Forms 940, 941, 943, 944, or 945 in full
or on time.
- Did not prepare employment tax returns (Form 941,
940, 943, 944, 945) on behalf of a client in an accurate and/or
timely manner.
Other. Some examples of other tax preparer
misconduct or improper tax preparation practices include,
but are not limited to, (1) fee dispute and (2) bad behavior
such as threats.
Note: Do not use Form 14157: (1) if you suspect your
identity was stolen (use Form 14039); (2) if a tax return
preparer filed a return or altered your return without your
consent and you are seeking a change to your account
(submit both Form 14157-A and Form 14157); or (3) to report
alleged tax law violations (use Form 3949-A).

IRS REACHES OUT TO EMPLOYERS THAT OUTSOURCE
PAYROLL AND RELATED TAX DUTIES In addition to
reminding employers about Form 14157, the IRS recently
published an article in the SSA/IRS Reporter on steps
employers can take to protect themselves from the small
number of unscrupulous third-party payroll service providers

and reporting agents (see PAYROLL CURRENTLY, Issue No. 1,
Vol. 22). See also, IRS Fact Sheet 2013-9, Tips for Employers
Who Outsource Payroll Duties, which offers much of the same
advice (see PAYROLL CURRENTLY, Issue No. 8, Vol. 21).
OCSE Updates and Reminders
he Office of Child Support Enforcement (OCSE) offers

reminders and updates concerning recent developments.
Reminder: UIFSA 2008 mandate
OCSE has issued an information memorandum to
clarify recent developments affecting international child
support [IM-15-01, 4-13-15; www.acf.hhs.gov/programs/css/
resource/uniform-interstate-family-support-act-2008-andhague-treaty-provisions].
In 2008, the Uniform Interstate Family Support
Act (UIFSA) was amended to integrate the appropriate
provisions of the Hague Convention on the International
Recovery of Child Support and Other Forms of Family
Maintenance (known as UIFSA 2008; see The Payroll
Source, pp. 9-25 9-26). The Preventing Sex Trafficking
and Strengthening Families Act, enacted in 2014 (Pub.
L. No. 113-183), requires states to adopt UIFSA 2008 to
improve international child support recovery (see PAYROLL
CURRENTLY, Issue No. 11, Vol. 22). States must do so in their
next legislative sessions, with a grace period to allow for the
timing of those sessions.
OCSE explains that the Hague Treaty will help U.S.
children by greatly expanding the number of countries
that will recognize and enforce U.S. child support orders.
Therefore, more U.S. children will be able to obtain financial
support, regardless of where their parents live. Like many
treaties, the Hague Treaty is not self-executing and
legislation is required to implement its provisions. Because
child support in the U.S. is handled at the state level (not
federal), the treaty must be implemented by state law.
States must enact UIFSA 2008 as a condition of
continuing receipt of federal funds. Note that all states
already use UIFSA to process interstate and international
cases. The 2008 UIFSA amendments add provisions that
meet treaty requirements concerning the recognition

and enforcement of treaty orders. Once all the states have
amended their laws, the U.S. will be able to ratify the treaty.
Reminder: standard child support withholding order
In July 2014, OCSE released an updated version
of the standard child support withholding order, Income
Withholding for Support (IWO) order/notice [Action
Transmittal AT-14-05, 7-15-14; www.acf.hhs.gov/programs/
css/resource/2014-revised-income-withholding-for-supportform-and-instructions]. The updated IWO and instructions
are available at www.americanpayroll.org/members/
Forms-Pubs/#non.
OCSE advised that states, tribes, and others should
begin using the revised IWO immediately. However, to
allow for programming time, employers and other income
withholders were directed to continue to honor the previous
version of the form (which expired on May 31, 2014) for new
income withholdings until July 31, 2015. The new version of
the IWO expires on July 31, 2017.
Update: wage withholding data
OCSE has released a Dear Colleague Letter with financial
and statistical information on state child support programs for
fiscal year 2014 (10-1-13 9-30-14) [DCL-15-09, 4-16-15; www.
acf.hhs.gov/programs/css/resource/fy-2014-preliminarydata-report-announcement]. According to the report,
employers withheld and remitted more than $24.089
billion for child support in fiscal year 2014 75% of the total
collected for the year (see PAYROLL CURRENTLY, Issue No.
4, Vol. 23, Special Report: APAs 2015 Capital Summit, for
OCSEs report that wage withholding accounts for more
than 74% of all child support payments).
USCIS Offers On-Demand I-9, E-Verify Training
.S. Citizenship and Immigration Services (USCIS)

now offers employers free on-demand webinars on
Form I-9 (Employment Eligibility Verification) and E-Verify
(E-Verify webinars, 5-5-15; www.uscis.gov/e-verify/
e-verify-webinars/take-free-webinar). Note: E-Verify
is a free, voluntary, Internet-based system that allows
participating employers to determine the employment
eligibility of new hires by comparing information from
the new hires Form I-9 with the Department of Homeland
Security and Social Security Administration records.
Form I-9 on-demand webinar. This self-service tool
reviews Form I-9 and imparts best practices at the viewers
convenience. Viewers can choose individual chapters
or watch the entire 22-minute video in one sitting. The

webinar is divided into the following 14 sections:
(1) Introduction;
(2) Why use Form I-9?
(3) Who can legally work in the United States?
(4) How do antidiscrimination laws protect employees?
(5) Who is required to have a Form I-9?
(6) How to Complete Section 1;
(9) Acceptable Documents for Form I-9;
(10) How should I store Form I-9s?
(11) How long am I required to keep Form I-9s on file?

(12) What do I do if I discover a mistake or Im missing a
Form I-9 for an employee?
(13) How do Form I-9 and E-Verify work together? and
(14) Where can I find contact information and
additional resources?
E-Verify on-demand webinar. This free self-service
tool reviews Form I-9 and E-Verify enrollment, how to run
a case, and more. Viewers can choose individual chapters
or watch the entire 14-minute video in one sitting. The
webinar is divided into the following nine sections:
(1) Introduction;
(2) E-Verify and Form I-9;
(3) Enrolling in E-Verify;
(4) How to Verify an Employee;
(5) Tentative Nonconfirmation;
(6) Immigration-Related Unfair Employment Practices;
(7) Stay Up to Date;
(8) Customer Service; and
(9) Conclusion.
IRS Announces HSA Limits for 2016
he IRS has announced the 2016 maximum contribution

levels for Health Savings Accounts (HSAs) and out-ofpocket spending limits for High Deductible Health Plans
(HDHPs) that must be used in conjunction with HSAs
[Rev. Proc. 2015-30, 2015-20 IRB 970; www.irs.gov/pub/
irs-drop/rp-15-30.pdf ]. The guidance is issued pursuant
to the Tax Relief and Health Care Act of 2006 (Pub. L. No.
109-432), which provides that for taxable years beginning
after December 31, 2006, the maximum annual HSA
contribution is an indexed statutory amount. Note: The
annual cost-of-living adjustments are released by June 1
for the following year.
2016 annual contribution levels for HSAs:
The maximum annual HSA contribution for
an eligible individual with self-only coverage is $3,350
(unchanged from 2015).
For family coverage, the maximum annual HSA
contribution is $6,750 ($6,650 in 2015).
The catch-up contribution for an individual age 55 or
older is $1,000 in 2009 and all years going forward.
Note: An individual who is an eligible individual on the
first day of the last month of the taxable year (December
for most taxpayers) is allowed the full annual contribution
(plus catch-up contribution, if age 55 or older by year-end),

regardless of the number of months the individual was
an eligible individual in the year. For individuals who are
no longer eligible individuals on that date, both the HSA
contribution and catch-up contribution apply pro rata
based on the number of months of the year a taxpayer is
an eligible individual.
2016 amounts for out-of-pocket spending on HSAcompatible HDHPs:
The maximum annual out-of-pocket amount for
HDHP self-only coverage is $6,550 ($6,450 in 2015) and the
maximum annual out-of-pocket amount for HDHP family
coverage is twice that, $13,100 ($12,900 in 2015).
2016 minimum deductible amounts for HSAcompatible HDHPs:
The minimum deductible for HDHPs is $1,300
(unchanged from 2015) for self-only coverage and $2,600
(also unchanged) for family coverage.
Note: A fiscal year plan that satisfies the requirements
for an HDHP on the first day of the first month of its fiscal
year may apply that deductible for the entire fiscal year.
DOL-RI Agree to Reduce Misclassification of Employees
fficials of the U.S. Department of Labors (DOL) Wage and

Hour Division (WHD) and the Rhode Island Department
of Labor and Training have signed a memorandum of
understanding (MOU) to protect the rights of employees by
preventing their misclassification as independent contractors
or other nonemployee statuses. Under the agreement,
the agencies will share information and coordinate law
enforcement [WHD News Release No. 15-0910-NAT, 5-7-15;
www.dol.gov/opa/media/press/whd/WHD20150910.htm].
In September 2011, the DOL and the IRS agreed to work
together and share information to reduce the incidence of
misclassification of employees, to help reduce the tax gap, and
to improve compliance with federal labor laws (see PAYROLL
CURRENTLY, Issue No. 10, Vol. 19). Since then, agency leaders
representing 22 states have signed MOUs with the DOL. More
information is available on the DOLs misclassification website
at www.dol.gov/whd/workers/misclassification/#whd).
The DOL explains that misclassified employees often are
denied access to critical benefits and protections such as
family and medical leave, overtime compensation, minimum

wage pay, and unemployment insurance to which they are
entitled. In addition, misclassification can create economic
pressure for law-abiding business owners, who often find it
difficult to compete with those who are skirting the law.
The MOUs enable the DOL to share information and
coordinate enforcement efforts with participating states in
order to level the playing field for law-abiding employers and
ensure that employees receive the protections to which they
are entitled under federal and state law.
Employers that misclassify their employees may not
be paying the proper overtime compensation, FICA, and
unemployment insurance taxes, or workers compensation
premiums. Employee misclassification generates substantial
losses to the Treasury and the social security and Medicare
funds, as well as to state unemployment insurance and
workers compensation funds.
The Rhode Island Department of Labor and Training (DLT)
is the latest state agency to partner with the DOL. According
to Scott Jensen, Director of the Rhode Island DLT, The

misclassification of employees as independent contractors
is workplace fraud. Rhode Island will not allow bad actors
to take advantage of their employees by failing to provide
IRS Posts More Q&As on ACA Information Reporting
ollowing publication of final regulations on information

reporting under the Affordable Care Act (ACA; see
PAYROLL CURRENTLY, Issue Nos. 4 and 5, Vol. 22), the IRS
posted corresponding questions and answers (Q&As)
on its website to expand on this guidance (see PAYROLL
CURRENTLY, Issue No. 10, Vol. 22). Recently released new
and updated Q&As address reporting by applicable large
employers under IRC 6056 (31 Q&As on Reporting of Offers
of Health Insurance Coverage by Employers (6056), 5-19-15;
www.irs.gov/uac/Questions-and-Answers-on-Reporting-ofOffers-of-Health-Insurance-Coverage-by-EmployersSection-6056). Excerpts from the new Q&As are presented
here.
8. Is an ALE member required to report under 6056 if
the ALE member has no full-time employees? An ALE member
that did not have an employee who was a full-time employee
in any month of the year (that is, no employee averaged at least
30 hours of service per week in any month) is not required to
report under 6056. An ALE member is required to report if it
has an employee who was a full-time employee for any month
of the year. For example, if an ALE member did not have at least
one full-time employee in any month in 2015, it is not required
to report in 2016 for calendar year 2015.
9. Is an employer that is not subject to the employer
shared responsibility provisions of 4980H (that is, the
employer is not an ALE member) required to file under
6056? No. An employer that is not subject to the employer
shared responsibility provisions of 4980H is not required to
report under 6056. Thus, an employer that employed fewer
than 50 full-time employees (including full-time equivalents)
during the preceding calendar year is not subject to the
reporting requirements of 6056. However, it may be subject
to reporting requirements under 6055 if it is a self-insured
employer.
12. Is an ALE member required to report under 6056
with respect to a full-time employee who is not offered
coverage during the year? Yes. An ALE member is required to
report information about the health coverage, if any, offered
to each of its full-time employees, including whether an offer
of health coverage was (or was not) made. This requirement
applies to all ALE members, regardless of whether they
them with necessary workplace protections like workers

compensation insurance, unemployment benefits and
overtime pay. Allowing this activity to persist is unfair to Rhode
Island businesses that play by the rules.
offered health coverage to all, none, or some of their full-time

employees.
For each of its full-time employees, the ALE member is
required to file Form 1095-C with the IRS and furnish a copy
of Form 1095-C to the employee, regardless of whether or
not health coverage was or was not offered to the employee.
Therefore, even if an ALE member does not offer coverage to
any of its full-time employees, it must file returns with the IRS
and furnish statements to each of its full-time employees to
report information specifying that coverage was not offered.
22. May an ALE member furnish a Form 1095-C to
an employee by hand delivery? Yes. Form 1095-C may be
delivered to employees in any manner permitted for delivery
of Form W-2 (Wage and Tax Statement).
23. Must an ALE member furnish a Form 1095-C within
30 days of the employees written request if the employee
terminates employment and requests the statement? No.
This requirement is applicable to the furnishing of Forms
W-2 under IRC 6051, but is not applicable to the furnishing
of a Form 1095-C. Accordingly, an employer may, but is not
required to furnish a Form 1095-C upon an employees request
following a termination of employment.
In addition, if the employer furnishes a Form 1095-C to
the employee under such circumstances and the relevant
information changes (for example, the employee is rehired
before the end of the year), the employer will need to furnish
an updated Form 1095-C to the employee reflecting the
updated information as filed with the IRS.
29. For the methods of reporting, including reporting
facilitated by a third party, may an ALE member file more
than one Form 1094-C? Yes. An ALE member may file more
than one Form 1094-C, provided that one of those transmittals
is an authoritative transmittal reporting aggregate employerlevel data for the ALE member. For example, Corporation XYZ
has two separate operating divisions, Division A and Division
B. XYZ may file separate Forms 1094-C for Division A and
Division B, but must designate one of them as the authoritative
transmittal reporting combined employer-level data including
both divisions.
CEO Sentenced to Prison for Failure to Pay Employment Taxes
he U.S. Department of Justice has announced that

Kevin Bertram, a Washington, DC businessman, has
been sentenced to prison for failing to pay nearly $1
million in withheld employment taxes [Justice News Press
Release, 5-5-15; www.justice.gov/briefing-room].
Bertram, former CEO of the wireless technology firm
Distributive Networks LLC, has been:
sentenced to serve 30 months in prison

to be followed by three years of supervised release, and
ordered to pay $897,921 in restitution to the IRS.
On February 10, Bertram pleaded guilty in the U.S.
District Court for the District of Columbia to willfully failing
to pay over more than $900,000 in employment taxes,
including federal income taxes, as well as the social security

and Medicare taxes withheld from the wages of Distributive
Networks employees.
According to court documents, Bertram operated
Distributive Networks from 2004 through 2010. The
company, which was named one of Washington, DCs Great
Places to Work by Washingtonian magazine in 2007, created
technology that allowed cell phone users to participate in
contests, download ringtones, and receive content such as
trivia and horoscopes.
According to court documents, Distributive Networks
provided employee perks, such as free Starbucks coffee and
IRS Updates List of Designated Private Delivery Services
n Notice 2015-38, the IRS has:

updated the list of designated private delivery
services (PDSs) that taxpayers may use to file returns and
have the assurance that a timely mailing will be treated as a
timely filing under IRC 7502 (see The Payroll Source, pp. 7-10
and 8-32);
provided rules for determining the postmark date for
these services; and
provided a new address for submitting documents to
the IRS with respect to an application for designation as a
designated PDS.
The changes are effective May 6, 2015 [Notice 2015-38,
5-6-15; www.irs.gov/pub/irs-drop/n-15-38.pdf].
Updated PDS list
The IRS is adding four new delivery services to the list
of designated delivery services: FedEx First Overnight, FedEx
International Next Flight Out, FedEx International Economy;
and UPS Next Day Air Early AM (this updates 2015 Publication
15, Circular E, Employers Tax Guide, p. 6; see PAYROLL
CURRENTLY, Issue No. 2, Vol. 23).
Effective May 6, 2015, the list of designated PDSs is as
follows:
FedEx. FedEx First Overnight, FedEx Priority Overnight,
FedEx Standard Overnight, FedEx 2 Day, FedEx International
Next Flight Out, FedEx International Priority, FedEx
International First, and FedEx International Economy.
gym memberships, and a 100% matching contribution to its

employees 401(k) plans. However, Bertram willfully failed to
comply with the companys employment tax obligations.
For quarterly tax periods in late 2007 through mid-2009,
he failed to file Distributive Networks required quarterly
Forms 941 (Employers Quarterly Federal Tax Return) and failed
to pay over $927,921.78 in employment taxes due. At the
same time that he was failing to pay income and other taxes
withheld from employees paychecks, he spent hundreds of
thousands of dollars of company funds on sporting event
tickets and personal luxury goods.
UPS. UPS Next Day Air Early AM, UPS Next Day Air, UPS
Next Day Air Saver, UPS 2nd Day Air, UPS 2nd Day Air A.M.,
UPS Worldwide Express Plus, and UPS Worldwide Express.
Note: This list of designated PDSs and services will remain
in effect until further notice. The IRS will publish a subsequent
notice setting forth a new list only if a designated PDS or
service is added to or removed from this list.
Special rule for determining PDS postmark date
Each PDS designated in this notice records electronically
the date on which an item was given to it for delivery, which is
treated as the postmark date for purposes of 7502.
Under this notice, the postmark date for an item
delivered after the due date is presumed to be the day that
precedes the delivery date by an amount of time that equals
the amount of time it would normally take for an item to be
delivered under the terms of the specific type of delivery
service used (e.g., two days before the actual delivery date for
a two-day delivery service). To overcome this presumption,
a taxpayer must provide information showing that the date
recorded in the PDSs electronic database is on or before
the due date, such as a written confirmation produced and
issued by the PDS.
Each PDS stores the date recorded in its database only
for a finite period, but for no less than six months. Senders or
recipients using a PDS can obtain information concerning the
date recorded by contacting the PDS.
ACA Tax Tips for Small Employers Stress Importance of

Properly Calculating Workforce Size
nder the Affordable Care Act (ACA), the size

and structure of an employers workforce helps
determine which parts of the law apply to that employer.
The IRS has posted Tax Tips on its website on how the
ACA affects employers depending on the size of their
workforce [IRS Health Care Tax Tip 2015-30, 5-6-15; www.
irs.gov/Affordable-Care-Act/The-Affordable-Care-Act-andEmployers-Why-Workforce-Size-Matters; IRS Health Care
Tax Tip 2015-31, 5-13-15; www.irs.gov/Affordable-CareAct/Individuals-and-Families/Find-out-how-ACA-affectsEmployers-with-fewer-than-fifty-Employees].
50 or more full-time employees
The number of employees an employer had during
the prior year determines whether it is an applicable large

employer (ALE) for the current year. This is important because
two provisions of the ACA apply only to ALEs:
The employer shared responsibility provision (www.
irs.gov/Affordable-Care-Act/Employers/Employer-SharedResponsibility-Provisions), and
The employer information reporting provisions
(www.irs.gov/Affordable-Care-Act/Employers/InformationReporting-by-Applicable-Large-Employers) governing offers
of minimum essential coverage (www.irs.gov/Affordable-CareAct/Employers/Minimum-Value-and-Affordability).
An employer with 50 or more full-time employees or fulltime equivalents is considered an ALE. Employers with fewer
than 50 full-time or full-time equivalent employees are not

ALEs.
For purposes of the employer shared responsibility
provision, the number of employees a business had during the
prior year determines whether it is an ALE in the current year.
Employers make this calculation by averaging the number of
employees they had throughout the year, which takes into
account workforce fluctuations many employers experience.
To determine its workforce size for a year, an employer
adds the total number of full-time employees for each month
of the prior calendar year to the total number of full-time
equivalent employees for each calendar month of the prior
calendar year. The employer then divides that combined total
by 12.
Fewer than 50 full-time employees
If an employer has fewer than 50 full-time employees,
including full-time equivalent employees, on average during
the prior year, the employer is not an ALE for the current calendar
year. Therefore, the employer is not subject to the employer
shared responsibility provisions or the employer information
reporting provisions for the current year. Employers with 50 or
fewer employees can purchase health insurance coverage for
their employees through the Small Business Health Options

Program better known as the SHOP Marketplace (https://
www.healthcare.gov/small-businesses/how-do-i-apply-forcoverage-in-the-shop-marketplace/).
Calculating the number of employees is especially
important for employers that have close to 50 employees or
whose workforce fluctuates throughout the year. Employers
that have fewer than 25 full-time equivalent employees with
average annual wages of less than $50,000 may be eligible
for the small business health care tax credit (www.irs.gov/
uac/Small-Business-Health-Care-Tax-Credit-and-the-SHOPMarketplace) if they cover at least 50% of their full-time
employees premium costs and generally, after 2013, if they
purchase coverage through the SHOP.
All employers, regardless of size, that provide self-insured
health coverage must file an annual information return
(www.irs.gov/Affordable-Care-Act/Employers/InformationReporting-by-Providers-of-Minimum-Essential-Coverage)
reporting certain information for individuals they cover. The
first returns are due to be filed in 2016 for coverage provided
during 2015.
IT Service Desk Staff Were Not Exempt Administrative Employees
loomberg L.P., located in New York City, provides

financial news and tools to clients around the world.
The companys core business is the sale of data, analytics,
and news delivered to subscribers over its proprietary
Bloomberg Terminal product.
Service Desk Representatives. Bloomberg employs
information technology (IT) support staff members who
provide technical support to other Bloomberg employees
such as sales representatives. Employees who need
assistance with computer issues (hardware or software),
mobile technology, or telephones submit tickets that are
routed to Service Desk Representatives (SDRs). An SDR who
receives a ticket must decide if it is an issue that he or she can
resolve or whether it must be escalated to a department
other than the Service Desk. SDRs update the progress of
work on a ticket by making entries into Bloombergs help
desk system.
Exempt status disputed. Bloomberg classified SDRs as
employees exempt from the overtime requirements of the
Fair Labor Standards Act (FLSA) and did not compensate
them for hours worked over 40 in a workweek. Several of
the SDRs sued Bloomberg to recover unpaid overtime under
the FLSA, but Bloomberg argued that they were exempt
administrative employees. The court disagreed and said
the SDRs were nonexempt employees entitled to overtime
compensation [Siegel v. Bloomberg L.P., No. 13cv1351 (DLC),
2015 U.S. Dist. LEXIS 5602 (SD N.Y., 1-16-15)].
Primary duty test for exemption not satisfied
To qualify as an FLSA-exempt administrative employee,
the employee must satisfy several tests, one of which is that
the employees primary duty must include the exercise of
discretion and independent judgment regarding matters of
significance (see The Payroll Source, p. 2-8). The SDRs were

not exempt because they did not satisfy this test.
Matters of significance. The court explained that
even if the primary duty of the SDRs involved the exercise
of discretion and independent judgment, the SDRs did
not exercise discretion and independent judgment with
respect to matters of significance. Here, neither the level
of importance nor consequence of the work the SDRs
performed rose to the level of a matter of significance.
The fact that Bloombergs core business is providing
hardware and software to its clients did not make the
SDRs work significant. And the fact that an SDRs failure to
troubleshoot a problem properly could lead a salesperson
to lose a sale was no different in this business than it would
be in any other business.
Bloombergs SDRs did none of the things considered
matters of significance that would qualify them for
exemption. They did not design or develop the hardware
and software that form the basis of the Bloomberg
Terminal product. They had no authority to formulate,
affect, interpret, or implement management policies or
operating practices, and could not waive or deviate from
established policies and procedures without prior approval.
They were not involved in planning the employers longterm or short-term business objectives or carrying out
major assignments or committing major resources in the
conduct of Bloombergs business. SDRs could not negotiate
on behalf of and bind Bloomberg on significant matters
and did not represent Bloomberg in handling complaints,
arbitrating disputes, or resolving grievances.
STATE AND LOC AL NE WS

For more state and local news, subscribe to APAs PayState Update, the biweekly e-newsletter
devoted exclusively to state and local payroll compliance. Call 210-224-6406 or
visit www.americanpayroll.org/product/47/86 for more information.
Two States Pay Off Federal UI Loans

Recently, two states New York and North Carolina paid off their federal unemployment insurance (UI) loans. If these
states do not take out new loans before the 11-10-15 deadline, they will avoid being FUTA credit reduction states for 2015
(see PAYROLL CURRENTLY, Issue No. 5, Vol. 23). As of 6-1-15, six states California, Connecticut, Indiana, Kentucky, Ohio, and
South Carolina and the Virgin Islands have outstanding federal UI loans and are potential FUTA credit reduction states for
2015 (see http://workforcesecurity.doleta.gov/unemploy/budget.asp#tfloans).
California
Paid sick leave web resources available. The California Healthy Workplaces, Healthy Families Act of 2014 (A.B. 1522,
L. 2014) requires employers to provide certain employees who work in California with paid sick leave, effective 7-1-15.
Employer posting requirements took effect 1-1-15. The Department of Industrial Relations, Division of Labor Standards
Enforcement, has made a wide variety of resources available on its website (see www.dir.ca.gov/dlse/ab1522.html),
including Frequently Asked Questions, key facts about the law and its requirements, notice templates and workplace posters
in English, Spanish, and Vietnamese, and a webinar. A dedicated email address AB1522@dir.ca.gov is also available for
employers and employees with questions.
Delaware
UI employer portal available. The Department of Labor, Division of Unemployment Insurance (DUI), has announced
that employers can now use its employer portal to file quarterly unemployment insurance wage reports online (this
updates The Payroll Source, p. 7-36). Electronic payments via ACH can also be made using the portal, along with adjustment
applications. The portal is available online at https://oes.delawareworks.com. Employers will need their employer account
number and federal employer identification number to register to use the portal. Employers with questions may call DUIs
Employer Contribution Operations at 302-761-8484 or send an email to DOL_UI_Tax_Questions@state.de.us.
Kansas
New hire reporting website launched. The Kansas Department of Labor (DOL) has launched a new website at
www.dol.ks.gov/UI/newhires_BUS.aspx to provide employers with detailed information about reporting new hires,
including how to report online, and multistate reporting (this updates The Payroll Source, p. 1-43). Frequently Asked
Questions and compliance information are also available. Employers are required to report new hires within 20 days of hire
[Department for Children and Families, News Release].
Maryland
Tax amnesty program announced. A tax amnesty program will run from 9-1-15 through 10-30-15. It will apply to
several tax types, including withholding taxes. Employers that participate will have all civil penalties and half of the interest
waived. Employers must not have participated in state tax amnesty programs from 1999 through 2014 to be eligible for the
amnesty program in the fall. Eligible employers will be required to file any outstanding returns and pay the full amount of
taxes owed (in addition to half of the interest owed), pay taxes owed on returns that were previously filed (along with half of
the interest owed), or sign a payment agreement with the state [S.B. 763, L. 2015].
Missouri
Tax amnesty program announced. Between 9-1-15 and 11-30-15, the Department of Revenue (DOR) will conduct a tax
amnesty program. It will apply to tax liabilities (including withholding tax liabilities) due on or before 12-31-14. The DOR will
not collect any penalties or interest as part of the program. Amnesty will be granted to employers that: apply for amnesty
within the deadline, file a tax return for each taxable period for which amnesty is requested, pay the entire balance due by
11-30-15, and agree to comply with state tax laws for eight years following the date of the agreement. An employer that is
a party to any criminal investigation or any pending litigation for nonpayment, delinquency, or fraud in relation to state tax
cannot participate in the program [H.B. 384, L. 2015].
North Dakota
Payment for certain PTO may be withheld on termination. Effective for terminations that occur on or after 8-1-15,
private employers are permitted to withhold payment for paid time off (PTO) if: the PTO was awarded by the employer but
has not yet been earned by the employee and, before awarding the PTO, the employer provided the employee with written
notice of the limitation on the payment of awarded PTO [H.B. 1202, L. 2015].
Oklahoma
Deductions from state employees wages for union dues prohibited. Effective 11-1-15, state agencies are prohibited
from making payroll deductions from a state employees wages for membership in any public employee association or
organization, or professional organization that collectively bargains on behalf of its membership pursuant to any provision
of federal law [H.B. 1749, L. 2015].
Tennessee
Electronic UI quarterly wage reporting threshold lowered. Effective 1-1-16, employers with 10 or more employees
(and agents that report wages for 10 or more employees for one or more employers) are required to file unemployment
insurance (UI) wage reports electronically (this updates The Payroll Source, p. 7-38). Currently, employers with 250 or more
employees must file UI wage reports electronically or on magnetic media (diskette or CD). Employers (and agents) with 10
to 99 employees will be permitted to submit an affidavit to the Commissioner of the Department of Labor and Workforce
Development if the electronic filing requirement will create an undue hardship, and may be permitted to file reports on
paper. Effective 7-1-16, employers and agents that fail to file reports electronically as required will be subject to a penalty of
$50 for each month the report is past due (up to $500) [S.B. 102, L. 2015].
Utah
Annual withholding return and Forms W-2: electronic filing mandate, due date, penalties updated. Effective 1-1-16,
all employers must file Form TC-941R, Utah Annual Withholding Reconciliation, and accompanying Forms W-2 electronically
by January 31 of the following year (this updates The Payroll Source, p. 8-121). Thus, all 2015 Form TC-941R and Forms W-2
must be filed electronically by 2-1-16 (since 1-31-16 is a Sunday) using the State Tax Commissions Taxpayer Access Point
(TAP) system. Previously, Form TC-941R had to be filed by February 28 or March 31 if Forms W-2 were filed electronically.
Employers that filed 250 or more Forms W-2 were required to file electronically (magnetic media was not accepted).
Effective 1-1-16, an employer that fails to file Forms W-2 electronically on time or provides inaccurate incomplete
information as required by the IRS is subject to the following penalties:
$30 per form, up to $76,000 in a calendar year, if the employer files the form more than 14 days after the due date, but
no later than 30 days after the due date;
$60 per form, up to $200,000 in a calendar year, if the employer files the form more than 30 days after the due date but
on or before June 1; or
$100 per form, up to $500,000 in a calendar year, if the employer files the form after June 1, or fails to file the form
[S.B. 250, L. 2015].
West Virginia
EFT threshold increased. Effective 1-1-16, the threshold for payment of withholding taxes via electronic funds transfer
(EFT) will increase to $25,000 from $10,000 during the immediately preceding 12-month period of July 1 to June 30
[H.B. 2877, L. 2015].
Payment on termination rules revised. Effective 6-11-15, for voluntary and involuntary terminations an employees
wages due for work performed prior to termination must be paid on or before the next regular payday (currently, within
four business days or next regular payday, whichever is earlier, for involuntary terminations; this updates The Payroll Source,
p. 5-8). However, fringe benefits provided pursuant to an agreement between the employee and employer that are due
but are to be paid at a future date or upon additional conditions which are ascertainable, must be paid according to the
agreement (and are not payable on or before the next regular payday). If an employee requests payment by mail, payment
is considered to have been made on the date the mailed payment is postmarked. Also, employer penalties are reduced from
all wages due plus triple that amount to all wages due plus double that amount [S.B. 12, L. 2015].
CURRENTLY
Publisher,
Executive Director
Dan Maddux
Senior Director of
Publications, Education,
and Government Relations
Michael P. OToole, Esq.
Director of Publications
Laura Lough, Esq.
Manager, Art Department
Jennifer Sanfilippo
Managing Editor
Anne S. Lewis, Esq.
Editors
Edward Kowalski, Esq.
Lia Coniglio, Esq.
Inside Washington
William Dunn, CPP
Curtis Tatum, Esq.
Graphic Designer
Caren J. Bennett
Web Implementation
Rosemary Birardi
PAYROLL CURRENTLY NEWSLETTER

Payroll Currently (ISSN 1065-6529) is published by the
American Payroll Institute, Inc., in cooperation with The
American Payroll Association, 660 North Main Avenue,
Suite 100, San Antonio, TX 78205-1217; Tel: 210-226-4600;
Fax: 210-226-4027. Payroll Currently is designed to provide
authoritative information in regard to the subject matter
covered. It is provided with the understanding that the
publisher is not engaged in rendering legal, accounting
or other professional service. If legal advice or other
expert assistance is required, the services of a competent
professional person should be sought. Copyright 2015
American Payroll Institute, Inc. All rights reserved. Printed in
the USA.

NACHA Approves Same Day ACH Settlement Proposal Supported by APA

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NACHA Approves Same Day ACH Settlement Proposal Supported by APA

n May 19, NACHA The Electronic Payments

Same Day ACH

The Compliance Publication of the American Payroll Association

June 5, 2015 Volume # 23 Issue # 6

(original proposal was 10:00), with settlement occurring at

Effective dates. The amended rule will become

Capitol Hill Update

he following are some of the payroll-related bills

with current law, it provides that an employees earnings are

The Compliance Publication of the American Payroll Association

June 5, 2015 Volume # 23 Issue # 6

increase the basic standard deduction and include an

The Compliance Publication of the American Payroll Association

June 5, 2015 Volume # 23 Issue # 6

terminates an individual in good faith reliance on information

resulted in the issuance of approximately $375 million in

IRS Says Criminals Accessed 100,000 Tax Accounts

n May 26, the IRS announced that criminals using

social security information, date of birth, tax filing status, and

The Compliance Publication of the American Payroll Association

June 5, 2015 Volume # 23 Issue # 6

U.S. Supreme Court Decision on Maryland Double Taxation

he U.S. Supreme Court has ruled that Marylands

its core processing system to monitor for potential identity

the credit for county income taxes, some of the income

IRPAC Proposal for De Minimis Dollar Threshold for

he IRSs Information Reporting Program Advisory

The Compliance Publication of the American Payroll Association

June 5, 2015 Volume # 23 Issue # 6

any one box, it would trigger reporting on the entire form.

pointed out, however, that there are other instances where

Penalties for Late Payment of Final Wages Under California Law

he IRS Office of Chief Counsel has released a

203 late payment penalty may not be recovered as

The Compliance Publication of the American Payroll Association

June 5, 2015 Volume # 23 Issue # 6

pay wages on a timely basis.

TIGTA Says IRS Employment Tax Fraud Protections Need Improvement

n a recently issued report, the Treasury Inspector General

to safeguard and protect employers that use payroll

The Compliance Publication of the American Payroll Association

June 5, 2015 Volume # 23 Issue # 6

Most common types of third-party payroll providers

REPORTING AGENTS AND REVENUE PROCEDURE

The Compliance Publication of the American Payroll Association

June 5, 2015 Volume # 23 Issue # 6

The Compliance Publication of the American Payroll Association

June 5, 2015 Volume # 23 Issue # 6

alleged tax law violations (use Form 3949-A).

number of unscrupulous third-party payroll service providers

OCSE Updates and Reminders

he Office of Child Support Enforcement (OCSE) offers

meet treaty requirements concerning the recognition

USCIS Offers On-Demand I-9, E-Verify Training

.S. Citizenship and Immigration Services (USCIS)

or watch the entire 22-minute video in one sitting. The

The Compliance Publication of the American Payroll Association

June 5, 2015 Volume # 23 Issue # 6

IRS Announces HSA Limits for 2016