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NJ Employers-Reduce Your Unemployment Tax Rates-August Deadline

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Did you check your NJ SUI rates?
In July all New Jersey employers received a Notice of Employer Contribution Rates. This is not a bill, but rather a summary of the manner

in which the NJ Department of Labor calculates your employer contribution rate for unemployment and  disability. This form enables you

to determine whether a voluntary  contribution would save you money in the subsequent year.

Can I reduce the NJ SUI rate?
A voluntary contribution increases the reserve balance and may reduce your contribution rate. Each employer should calculate the amount

of the voluntary contribution required to reduce the rate. The required voluntary payment should be compared to the savings realized from a lower rate.

The unemployment expense is a substantial component of the labor cost of staffing agencies. You should give it careful attention. If you wish to make a

voluntary contribution to your reserve balance you have 30 days from the date of your notice to do so. We recommend that you verify all the NJ DOL

calculations including the amount of the employer contributions and the benefits charged to your account. Report any discrepancies to the NJ Dept. of Labor.

By making a voluntary payment, employers may reduce the NJ SUI rate for the coming year. Please be aware that this payment increases your reserve

balance and helps reduce the NJ SUI rate in future years as well.

Good News for NJ Employers: Federal Unemployment Tax (FUTA) Surcharge Avoided

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New Jersey employers can breathe a sigh of relief, as Governor Christie has announced that new fiscal management practices have brought New Jersey’s Unemployment Insurance Trust Fund into solvency for the first time since 2009. This spares businesses from a drastic tax surcharge, as Federal Unemployment Tax (FUTA) was set to increase from the base rate of 0.6% ($42 maximum per employee) to 1.5% ($105 maximum per employee).  The surcharge is imposed when a state has borrowed from the Federal Unemployment Trust Fund and increases each year. In 2012, NJ employers paid 1.2% due to the surcharge ($84 maximum per employee). By repaying the loan to the Feds, employers will not be subject to this surcharge on their 2013 FUTA wages and will only pay the base rate of 0.6% ($42 maximum per employee).   

Payroll Cards Under Investigation by N.Y. Attorney General

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If your company uses payroll cards to compensate its employees, watch out. New York Attorney General Eric Schneiderman has launched an investigation into companies that pay hourly employees by depositing payroll onto pre-paid cards. Why the concern? Payroll cards, like debit cards, typically have fees associated with inquiries, card replacement, ATM withdrawals, or inactivity. Schneiderman’s concern is that the fees associated with these cards may be insufficiently disclosed or excessive and that the fees reduce employees’ take home pay. Payroll cards can raise a host of legal issues for the employer as well. For example, federal law prohibits mandatory use of the cards as a condition of employment. It has been reported that many employees have been forced to accept the card. It would be highly advisable for employers to seek competent counsel to ensure their compliance before it’s too late.

 

States Conforming to IRS Employee Classification Amnesty

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When the IRS announced its employee classification amnesty, it caused a number of concerns for employers. A primary concern was whether the States would conform, or if they would just consider the IRS application a confession and prosecute taxpayers that take advantage of the program. While it may be too soon to tell in many states, some have conformed already. [Read more…] about States Conforming to IRS Employee Classification Amnesty

IRS INTRODUCES COMPLIANCE PROGRAM FOR EMPLOYEE CLASSIFICATION

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As part of the “Fresh start” initiative by the IRS to encourage more corporate and individual tax compliance, a new voluntary program has been announced to encourage employers to properly classify employees as such, rather than as independent contractors. Under the program, employers can obtain substantial relief from federal payroll taxes they would have owed in the past, if they prospectively classify their hires as employees. To be eligible, an applicant must: [Read more…] about IRS INTRODUCES COMPLIANCE PROGRAM FOR EMPLOYEE CLASSIFICATION