Overview: A growing employer trend over the past several years has been to integrate payroll within the HR department. So, now more than ever, HR managers need to understand all the complex issues and requirements involved in payroll tax law compliance in order to effectively oversee payroll processing and ultimately avoid costly penalties. This involves managing the following tasks, among many others:
Trends: The following are just a few of the important issues that will have an impact on payroll in 2014!
Author: Rena Pirsos, JD, Legal Editor
The IRS has issued Revenue Ruling 2014-32 (Rev. Rul.) providing guidance on the tax consequences of employer use of smartcards, debit or credit cards, or other electronic media to provide qualified transportation fringe benefits to employees. The Rev. Rul. also discusses whether mandatory delivery charges employees incur when ordering vanpool vouchers are qualified transportation fringe benefits.
Courts declared same-sex marriage bans unconstitutional in Kansas, Missouri, Montana and South Carolina. The 6th Circuit Court of Appeals upheld same-sex marriage bans in Kentucky, Michigan, Ohio and Tennessee.
Employee benefits, such as health insurance, sick pay, disability pay, workers' compensation insurance and retirement savings plans, may be subject to withholding for federal income taxes (FIT), Social Security and Medicare (FICA) taxes or federal unemployment (FUTA) taxes. This section assists HR professionals in understanding how each particular type of benefit plan must be structured and how to properly tax and report contributions, reimbursements and distributions in order to ensure compliance with the Internal Revenue Code.
This chart lists the Federal Unemployment Tax Act (FUTA) credit-reduction states for the current year, along with each state's respective credit-reduction amount and net FUTA rate. Employers paying wages subject to FUTA tax in the listed states will owe a greater amount of the tax when they file their fourth quarter Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return.
Despite the DOMA decision handed down by the Supreme Court in Windsor, state laws still vary greatly regarding both the recognition of same-sex marriage and the taxation of benefits provided to an employee's same-sex spouse by an employer. This Quick Reference chart summarizes federal and state law regarding whether same-sex marriages, civil unions and/or domestic partnerships are recognized, and whether the value of benefits provided by an employer to an employee's same-sex spouse or civil union or domestic partner is taxable. This chart will be updated when any changes in these laws occur.
The value of health insurance benefits provided to an employee's same-sex spouse or partner and/or their dependents is taxable in South Carolina.
The IRS has adopted as final regulations that clarify proposed regulations issued in 2012 allowing employers to reimburse employees who are not away from home overnight for their local lodging expenses as a tax-free working condition fringe benefit (rather than a taxable personal expense) under the Internal Revenue Code.
The value of health insurance benefits provided to an employee's same-sex spouse or partner and/or their dependents is taxable in Missouri.
The value of health insurance benefits provided to an employee's same-sex spouse or partner and/or their dependents is taxable in Michigan
In-depth review of the spectrum of Kansas employment law requirements HR must follow with respect to taxation of employee benefits.
HR and legal considerations for employers regarding payroll.