The proposed budget for 2012 has a great number of payroll related items. This one really needs watching carefully.
1. President Obama is proposing to increase the FUTA taxable wage base. It has been $7,000 for as long as I can remember. His proposed amount is $15,000. This would also affect any states, such as California, that use the current federal wage base. States are still free to set their own wage bases but can not go below $15,000 if this passes.
2. The FUTA surcharge of 0.2% which has been renewed since the early 1990's would be made permanent. Which actually makes it alot easier in the long run.
3. The FUTA rate will be lowered from 0.8% to 0.38%. This is after the permanent extension of the surcharge takes effect.
4. The IRS will finally be allowed to issue guidance on the proper classification of workers. This would be very helpful to know how they are looking at the regulations instead of being "neutral".
5. The lower penalties for misclassification of workers would be retained. But smaller employers would get more relief from the penalties if they filed the proper 1099's and agreed to reclassify the worker for the future.
6. Independent contractors who receive at least $600 per year would be able to request withholding from their payments. They say this is for the convenience of the service provider but I think its to try and get more taxes paid up front.
7. E-verify is going to be enhanced. I think this one is to help get the bill passed as it deals with the "concern" of the conservatives about immigration and illegal workers.
8. Reporting wages to Social Security will be increased from the current annual requirement to quarterly. It is kind of like when we use to report wages quarterly with our Form 941s. It appears they want to go back to that again.
This budget process needs to be carefully watched this time around. These proposals will create more work in payroll especially if the extra reporting is passed. We will keep you informed as the budget process progresses.
Payroll Services
ReplyDelete