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Improve Leadership Skills, Increase Efficiency

Fall Forum is coming! APA's annual conference will be hosted in Indianapolis September 27-29 at the JW Marriott Indianapolis Hotel.

Learn how to improve your leadership skills and take your organization to new levels of operational efficiency and compliance. Discover what makes the world's top payroll organizations successful in the areas of technology, management, processes, and overall best practices.

Take advantage of the new tracks offered at Fall Forum: Global Payroll Certificate Program: Advanced and Advanced Payroll Concepts.

Make your hotel reservations before the cutoff date of September 6. Reserve your accommodations now at www.americanpayroll.org



Achieve a Penalty-Free Year-End

Each year, the APA announces its Prism Award winners at 2018 is right around the corner, and year-end preparation courses begin in October. These one-day classes will cover best practices for year-end processing, including how to determine what benefits are taxable and how to apply them to W-2 forms, how to identify which states may be FUTA credit reduction states, and understanding the latest that Congress has in store for payroll processing.

Attendees can earn 6 RCHs, 0.6 CEUs, or 7 CPE credits for attending a nationwide class. Webinar attendees can earn up to 1.5 RCHs, 0.15 CEU, or 1.5 PE credits for each segment attended.

Register now.



Develop a Payroll
Framework This July

APA's Payroll 101: Foundations of Payroll Certificate Program is an important first step in payroll education. This July, pay pros will have three times the opportunity to take that first step.

On July 11, 18, and 25 in San Antonio, participants will begin a weeklong quest to establish a foundational knowledge of payroll. The Payroll 101 program provides a thorough overview of the laws and regulations that affect payroll. Attendees will gain practical experience through hands-on, computer-based exercises that allow participants to work through the payroll forms and calculations they will face in daily operations.

Payroll 101 attendees will also have the opportunity to take the Fundamental Payroll Certification (FPC) exam at the end of this course. A unique distinction, the FPC designation demonstrates an individual's baseline of payroll competency.

Boost your career with essential payroll know-how -- register for Payroll 101 in July!



Federal Panel Helps Answer Questions at Congress


By Jyme Mariani, Esq.

A panel of federal agency executives answered questions submitted by participants at APA's 35th Annual Congress in Orlando, Fla. Members of this year's panel were:

  • Anita Bartels, Manager, Midstates Territory, SB/SE (Small Business/Self-Employed) Employment Tax, Internal Revenue Service (IRS).
  • Mark Ruley, Team Leader, Division of Programmatic Applications Support, Social Security Administration (SSA).
  • Dan White, Jacksonville District Director, Wage and Hour Division (WHD), U.S. Department of Labor (DOL).
  • Sherri Grigsby, Manager, Employer Services Team, Office of Child Support Enforcement (OCSE).
  • Dave Basham, Program Analyst, U.S. Citizenship and Immigration Services (USCIS).
  • Here is a sampling of questions answered at the panel. To read all of the questions and answers from the panel, see the July and August editions of Payroll Currently.
IRS

Electronic Form W-2 requirements

Q. Our payroll department received employees' consent to issue Forms W-2 electronically. Do we need to make available electronically copies B, C, and 2 of the W-2? Can we provide one template with all the information required electronically and allow employees to print multiple copies if they are filing their federal and state individual tax returns by mail?

A. The electronic version of the Form W-2 must contain all the required information, and it also has to comply with Revenue Procedure 2016-54 (https://www.irs.gov/irb/2016-45_IRB/ar11.html) relating to substitute statements to recipients. It is reprinted in Publication 1141, General Rules and Specifications for Substitute Forms W-2 and W-3. It states: “All employers, including those who file electronically, must furnish employees with at least two copies of the Form W-2 and three or more for employees required to file a state, city, or local tax return.”

You do have to make those copies available electronically. If you are furnishing the W-2s electronically, you cannot give them one template so that they print all the copies they need. You also have to make the copies B, C, and 2 available. The requirement for employers to provide a copy C labeled “For Employee's Records” is really intended to remind the employees to maintain a copy of that Form W-2 in their records. If employees discover that earnings are missing from their records with Social Security, then this may give them some proof that they actually had those earnings.

Taxability of productivity rewards earned through a point system Q. My employer is initiating a program where employees can earn points by hitting certain productivity metrics. These points may be used by the employees to purchase gift cards. For example, an employee who receives 1,000 points can obtain a $10 gift card. Do we add the value of the points to income when the points are earned, or only when the gift cards are purchased?

A. The gift cards are cash equivalents, and they should be included in income at the time they are received or purchased. Assuming the points by themselves are not cash equivalents and do not have any intrinsic value until they are exchanged for a gift card, the employer should include the face value of the gift card in employee income and wages at the time of receipt or purchase, which means when it is handed to the employee.

SSA

Different employee names

Q. During employee exit interviews, we have employees sign various paperwork. When processing this paperwork, we saw that we had a person listed in our system as Sam Smith who signed the paperwork as Jane Jones. The supervisor told us that the person is transgender. We do not know whether she had her name legally changed, and now she is not around to ask. When we file her Form W-2, should we file it under the name we had in our system or under the name she was using when she left our employ? Would Social Security Number Verification Service (SSNVS) help us answer this question?

A. This is not a gender question. It goes back to a name change question. Treat it as you would any other person who provided you with a changed name. It is whatever your company policy is in terms of your payroll records.

You can always use SSNVS to find out if the person who changed a name came into SSA to get it changed. If he or she did not, then the new name that he or she is using in the exit interview will fail SSNVS or our name/number match when you file the W-2.

If it matches, and you choose as a company to send us a W-2 with the new name, we will post it to the correct record. We keep previous iterations. So if you use the old name that will also post to that individual's earnings record.

It is company policy how you handle this with your payroll department. If you require that employees have documentation to you before you make a change, then you can certainly use the old name. It will still post, and you will still get credit for the wages.


Again, it is strictly a name change. It has nothing to do with gender. We do not match on gender.

DOL

Nondiscretionary bonuses

Q. We are considering offering recruitment and retention bonuses to employees who recruit new employees to fill open positions. For example, if Jane recruits Chris to fill an open position, she will receive $100 at the time Chris is hired. If Chris stays six months, she will receive an additional retention bonus of $100. Does the recruitment bonus need to be included in the Fair Labor Standards Act (FLSA) overtime premium calculation at the time Jane receives it? If Chris stays six months and Jane receives the $100 retention bonus, does the employer have to take that $100 and divide it up over six months evenly and recalculate Jane's overtime premium for each week during that period?

A. Recruitment and retention bonuses are nondiscretionary bonuses and must be included in the regular rate for overtime purposes.

A nondiscretionary bonus is one where you say, “If you do this, you will get this.” If Jane recruits Chris, and Chris stays, then she will get the bonus. That makes the bonus part of the regular rate of pay. For the first bonus, $100 would be added in for that week. For the second one where it is for over a six-month period, you have to go back and recalculate the weeks in which Jane worked overtime during that six months. If she did not work overtime, nothing more has to be done. If she worked overtime in two of the weeks, you have to take that $100, allocate it back over the six-month period and recalculate. It is going to be a very, very small amount of money, but it is required.

OCSE

Third-party providers

Q. We have a child support order in place for an employee who has been out on disability leave. He is now being paid by a third-party provider. The custodial parent called yesterday to ask if her child support payment will be taken out of his disability pay. I have never forwarded a support or garnishment order to the disability administrator. Is the child support payment the responsibility of my company, or does a new order need to go to the third-party provider?

A. Disability income may be garnished for child support. If you are in this situation, you should forward the income withholding order (IWO) to your disability provider. If the provider would like to have an IWO with its name on it, you can contact the child support agency and ask that it issue a new order. OCSE's child support portal has a place for supplemental information where you can provide details about third parties. OCSE does not have one specifically for disability insurance, but it might be a really good item to add so that you can share this information on the portal and then OCSE can share it with child support agencies.

USCISIndependent contractors v. employees

Q. We recently reviewed our compliance with labor laws and changed the worker classification for five individuals from independent contractor to employee. Do we need to complete the employment verification process for these employees? What is our timing? For example, do we apply the first day rule for these employees to complete section 1 of Form I-9?

A. I like to refer to independent contractors as 1099 vendors. We do not tell you 100% of the time that those 1099 vendors do not require a Form I-9, but I would say a very, very high percentage do not.

For those vendors who went from a contractor to an employee, on the date of hire, you would abide by the rules for new hires in the Form I-9 process. The employee would need to complete section 1 of the Form I-9. And then the employee would have three days after he started working for pay to provide the required documents.

Jyme Mariani, Esq., is Editor of Payroll Information Resources for the APA.



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