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APS October 2018 Compliance Updates
APS reports on relevant, impactful compliance updates each month to help keep you at the top of your compliance game. This month we are seeing the release of state unemployment wage bases, state withholding tables and methods changes, and extended tax filing deadlines. Here are your December compliance updates:
IRS RELEASES 2ND DRAFT OF 2019 FORM W-4
On October 12, the Internal Revenue Service released an updated draft version of Form W-4 that replaced the first draft to remove any reliance on various withholding allowances. The Treasury Department announced the IRS will release the redesigned Form W-4 for use in 2020.
IRS W-2 VERIFICATION CODE AND MOVING EXPENSES REPORTS
W-2 Verification Code
The verification code pilot program for Form W-2 and Wage & Tax Statement will continue for tax year 2018. The program is a tax fraud prevention effort that involves a 16-digit verification code in Box 9 of the W-2 Form. Taxpayers will use the 16-digit number when filing individual tax returns electronically so the IRS can ensure that the form’s data belongs to the W-2 Form.
Moving Expense Reports
The IRS may be developing additional guidance for reporting 2017 qualified tax-free moving expenses reimbursed in 2018. The tax code overhaul (Pub. L. 115-97) suspended the exclusion of certain qualified moving-expense reimbursements from employee income starting with tax year 2018.
CONNECTICUT UNEMPLOYMENT TAX RATES & ANNUAL RECONCILIATION
Unemployment Tax Rates
Connecticut’s unemployment-taxable wage base will remain the same for 2019 at $15,000 annually. Unemployment tax rates for experienced employers will range from 1.9 percent to 6.8 percent and include a fund-solvency surtax of 1.4 percent.
On September 28, the state revenue department released Connecticut’s annual reconciliation for 2018. The CT-W3, Connecticut Annual Reconciliation of Withholding requires employers to report Connecticut income tax withheld for both the entire year and each quarter, total wages paid in 2018 to Connecticut residents, and the number of Forms W-2 filed.
GEORGIA PENALTY RELIEF
On October 15, the IRS reported Georgia victims of Hurricane Michael have until February 28, 2019, to file their payroll tax returns. The tax relief postpones various tax filing deadlines starting October 9, 2018, that included quarterly payroll tax returns due October 31, 2018, and January 31, 2019. Payroll tax deposit penalties won’t be enforced if deposits are made by October 24, 2018.
2019 MINIMUM WAGE RISING IN TWO U.S. TERRITORIES
American Samoa and the Commonwealth of the Northern Mariana Islands plan to increase minimum wage rates that will go into effect September 30, 2018. The Fair Minimum Wage Act of 2007 establishes specified minimum wage rates for American Samoa industries and raises the hourly minimum wages for all industries by 40 cents every three years on September 30 until the minimum wage reaches $7.25.
NEW JERSEY TAX FILING DEADLINES & MINIMUM WAGE
Tax Filing Deadlines
On September 25, the state taxation division announced that because of the extensive damage from Hurricane Florence, filing deadlines for New Jersey state taxes were extended for Hurricane Florence victims. Individuals or businesses that reside in the Hurricane Florence federal disaster area have until January 31, 2019, to file returns. This was the same extension that the IRS granted for filing federal taxes.
The state’s hourly minimum wage is to rise from $8.60 to $8.85 and will take effect on January 1, 2019.
NEW YORK OPENS EMPLOYER ELECTIONS FOR PAYROLL TAX
On October 1, the state Department of Taxation and Finance announced employers may now elect to pay New York’s payroll tax in 2019. Employers will elect each year to pay the payroll tax. Elections to pay the payroll tax in 2019 can be made until December 1, 2018.
OKLAHOMA UNEMPLOYMENT TAX RATES UNCHANGED FOR 2019
The state’s unemployment tax rates for experienced employers will not change for 2019. Unemployment tax rates for experienced employers are to be unaffected by a conditional factor and are to range from 0.1 to 5.5 percent.
SEATTLE MINIMUM WAGE TO RISE IN 2019
Seattle’s office of Labor standards announced Seattle employers with more than 500 workers worldwide have to pay a minimum hourly wage of $16 an hour starting January 1, 2019. Employers with less than 500 workers must pay at least a $12 an hour.
SOUTH DAKOTA CONFIRMS MINIMUM WAGE TO RISE IN 2019
South Dakota’s department of labor and regulation announced the state’s hourly minimum wage will rise from $8.85 to $9.19 on January 1, 2019. The state’s hourly minimum wage increase applies to all South Dakota employers and those exempt from the state minimum wage requirements are seasonal amusement or recreational establishments, babysitters, or outside salespeople.
WISCONSIN ISSUES 2019 UNEMPLOYMENT TAX RATES
Wisconsin’s unemployment tax rates for new construction employers will not change in 2019. For new construction employers with a taxable payroll of less than $500,000 over a 12-month period will have an unemployment tax rate of 3.75 percent for 2019. For those with a taxable payroll of at least $500,000 will have a tax rate of 3.9 percent.
SOCIAL SECURITY WAGE BASE & EARNINGS THRESHOLDS
Social Security Wage Base
On October 11, the Social Security Administration announced the Old-Age, Survivors and Disability Insurance (OASDI) taxable wage base will rise from $128,400 to $132,900 in 2019.
The SSA also announced that earnings threshold amounts will stay the same for domestic employees and election workers in 2019. The coverage threshold for domestic employees is $2,100 and the threshold is $1,800 for election workers.
COLORADO TO RAISE MINIMUM WAGE
On October 1, the Department of Labor and Employment issued a proposal stating that Colorado’s minimum wage would increase from $10.20 to $11.10 an hour starting in 2019. The tipped minimum wage would also increase from $7.18 to $8.08 an hour. Comments on the proposal to raise the hourly minimum wage are due November 8, 2018.
FLORIDA MINIMUM WAGE & PENALTY RELIEF
On October 15, Florida’s Department of Economic Opportunity reported the state’s hourly minimum wage will rise in 2019 with the minimum wage rate rising from $8.25 to $8.46.
On October 12, the IRS reported Florida victims of Hurricane Michael have until February 28, 2019, to file their payroll tax returns. Penalties on payroll tax deposits that were due October 7, 2018, will not be enforced as long as deposits are made by October 22, 2018.
INDIANA COUNTIES TO INCREASE TAX RATES
On October 1, four counties in Indiana will increase their local tax rates. The four counties are DeKalb, 2 percent to increase to 2.13 percent; Floyd, 1.15 percent to increase to 1.35 percent; Fulton, 1.93 percent to increase to 2.38 percent; and Vigo County, 1.25 percent to 2 percent.
Missouri Withholding Updates
On October 3, Missouri updated its withholding methods to correct the calculation of the state’s federal tax deduction. The income brackets, supplemental withholding rate, or tax rates in the 2018 Missouri Withholding Tax Formula have not changed. The formula requiring employers to calculate Missouri’s deduction of federal income tax liability for state tax purposes has changed for the withholding method.
MONTANA MINIMUM WAGE & UNEMPLOYMENT-TAXABLE WAGE
On September 28, a notice was released stating Montana’s hourly minimum wage will rise from $8.30 to $8.50. The hourly minimum wage increase will take effect on January 1, 2019.
Unemployment Taxable Wage
The state’s unemployment-taxable wage base is set to rise from $32,000 to $33,000 and will take effect on January 1, 2019.
NEW MEXICO UNEMPLOYMENT-TAXABLE WAGE BASE RISES
New Mexico’s unemployment-taxable wage base is set to rise from $24,200 to $24,800 in 2019.
OHIO TO RAISE MINIMUM WAGE
PUERTO RICO TO INTRODUCE NEW PORTAL FOR WITHHOLDING
Puerto Rico is set to introduce a new portal for withholding transactions that will begin December 10, 2018. Employers will need to use the Sistema Unificado de Rentas Internas portal to deposit withheld taxes and file withholding returns, including Form 499 R-1B, Forms 499 R-2/W-2 PR, and Form 499 R-3.
SAN FRANCISCO APPROVES MINIMUM WAGE INCREASE
San Francisco’s Board of Supervisors approved minimum wage amendments that will increase wages by $2 an hour for employees of for-profit contractors and entities holding city leases. The legislation was introduced in March 2017 to give a phased-in increase to employees of for-profit city contractors.
SOUTH CAROLINA PAYROLL TAX FILINGS & PERSONAL EXEMPTIONS
Payroll Tax Filings
On September 24, the IRS announced that Hurricane Florence victims of South Carolina have until January 31, 2019, to file their payroll tax returns. The tax relief extended numerous tax filing deadlines starting September 8, including quarterly payroll tax returns due October 31, 2018. The agency is offering this relief to FEMA disaster areas for individual assistance which covers employers with businesses in Chesterfield, Dillon, Georgetown, Horry, Marion, and Marlboro counties.
On October 3, Gov. Henry McMaster signed a South Carolina bill (H.B. 5431) that created a state-dependent exemption to the federal standard deduction. The bill establishes a 2018 dependent exemption of $4,110, which will replace the state’s current personal exemption.
VERMONT MINIMUM WAGE RISING IN 2019
Vermont’s hourly minimum wage will rise from $10.50 to $10.78 in 2019. The state’s hourly minimum cash wage for tipped workers cannot be less than half the minimum wage.
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