August/September 2006 Payroll & Tax News

• New Jersey Announces Key Unemployment, Disability, and Workers Compensation Figures for 2007


• Oregon Minimum Wage Increase


• Kentucky Supplemental Wage Regulation
  
• Pension Protection Act of 2006 Impacts Payroll


• Final Rule on Payroll Cards from Federal Reserve


• California Minimum Wage Increase


• California Implements State Disbursement Unit


• Updated 2007 Federal Domestic Per Diem Rates


• SSA Updates Rules for Obtaining Social Security Cards


• Ohio Reduces Withholding Taxes, Effective October 1, 2006


• IRS Issues Final Supplemental FIT Withholding Regulations


• IRS Announces New Tip Reporting Program


• Massachusetts Minimum Wage Increase

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New Jersey Announces Key Unemployment, Disability, and Workers Compensation Figures for 2007
The New Jersey Department of Labor and Workforce Development (LWD) has announced the annual changes for 2007 in the maximum benefit rates and the taxable wage base for New Jersey's Unemployment Insurance, Temporary Disability Insurance and Workers' Compensation programs. The taxable wage base will increase from $25,800 for 2006 to $26,600 for 2007. The amount of earnings required to establish a base week will also increase, from $123 for 2006 to $143 for 2007. These and other changes are detailed in a New Jersey LWD News Release.

The New Jersey Department of Labor Division of Employer Accounts had previously released associated employer and employee rates for 2007.

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Oregon Minimum Wage Increase
The state of Oregon will be increasing its minimum wage rate from the current $7.50 per hour to $7.80 per hour in January 2007.

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Kentucky Supplemental Wage Regulation
The Kentucky Department of Revenue issued a final regulation explaining the income tax withholding procedures required on supplemental wage payments. The regulation also defines vacation pay that is "paid in addition to regular wages to an employee who forgoes his vacation" as supplemental wages. The complete regulation can be viewed at http://www.lrc.ky.gov/kar/103/018/070.htm.

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Pension Protection Act of 2006 Impacts Payroll
On August 17, 2006, President Bush signed the Pension Protection Act of 2006 into law (Public Law 109-280, formerly H.R. 4). The White House described the new law as "the most sweeping reform of America's pension laws in over 30 years." The Act contains many new pension management and protection requirements, including employee notifications and statements, annual reporting changes, new disclosure mandates, and stronger pension funding rules. It also includes important payroll-related provisions. Read more about it.

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Final Rule on Payroll Cards from Federal Reserve
On August 24, 2006, the Federal Reserve issued its final rule stating that payroll card accounts fall under the consumer protection rule on electronic fund transfers. The final rule provides flexibility in the delivery of account transaction information to payroll card users by allowing financial institutions to offer telephone and electronic access, as well as paper statements when requested.

The amendment to Regulation E, which implements the Electronic Fund Transfer Act, will take effect July 1, 2007. The final rule can be found on the Fed's Web site at http://www.federalreserve.gov/boarddocs/press/bcreg/2006/20060824/default.htm.

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California Minimum Wage Increase
The state of California will be increasing its minimum wage rate from the current $6.75 per hour to $7.50 per hour in January 2007 and to $8.00 per hour in January 2008.

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California Implements State Disbursement Unit
Effective September 1, 2006, California child support withheld by employers must be submitted to the State Disbursement Unit (SDU) for processing. A significant benefit of the SDU is the option for employers to combine the child support withheld on behalf of all employees into a single payment. Refer to the following SDU link for details on how and where to send payments: http://www.childsup.cahwnet.gov/sdu/.

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Updated 2007 Federal Domestic Per Diem Rates
The General Services Administration has issued its listing of maximum per diem travel allowances for the fiscal year 2007. The new rates are effective October 1, 2006, for employers using the per diem substantiation method to determine business meal and lodging expenses for workers traveling within the continental United States. Updated rates by location, in addition to current and previous years' rates, are available at http://www.gsa.gov/perdiem.

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SSA Updates Rules for Obtaining Social Security Cards
The Social Security Administration (SSA) has posted new guidelines for receiving original and replacement social security cards. The new rules indicate that the number of replacement cards will be limited to 3 per year and 10 per lifetime. Legal name changes and other exceptions do not count toward these limits. For example, changes in noncitizen status that require card updates may not count toward these limits. Also, an applicant for a replacement card may not be affected by these limits if the person can prove that they need the card to prevent a significant hardship. Interested individuals should review the various topics under new rules for getting a social security number and card on the Social Security Administration's web site for more information.

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Ohio Reduces Withholding Taxes, Effective October 1, 2006
The Ohio Department of Taxation has published new withholding tax rates and methods, effective October 1, 2006. The new withholding tables reflect an acceleration of previously scheduled tax cuts. Details of the changes, as well as the pre-existing tables, are reported on the state's web site under Employer Withholding Taxes.

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IRS Issues Final Supplemental FIT Withholding Regulations
The IRS has released final federal income tax (FIT) withholding regulations on supplemental wage payments in excess of $1,000,000. Read more about it.

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IRS Announces New Tip Reporting Program (IR-2006-118, July 28, 2006)
The Internal Revenue Service issued guidance on its new tip reporting procedure, the Attributed Tip Income Program (ATIP) designed to ease the burden on businesses in the food and beverage industries.

Employers who participate in ATIP report the tip income of employees based on a formula that uses a percentage of gross receipts. Like other tip reporting programs, participation by employers and their employees is voluntary.

To view a summary of the new ATIP program visit http://www.irs.gov/newsroom/article/0,,id=160536,00.html. Details and requirements for participation in the three-year pilot program are available in Revenue Procedure 2006-30.

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Massachusetts Minimum Wage Increase
The state of Massachusetts will be increasing its minimum wage rate from the current $6.75 per hour to $7.50 per hour in January 2007 and to $8.00 per hour in January 2008.

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