Recent Payroll Developments

Bob Denkert, CPA, Auditing and Accounting Senior Manager   email
July 2010

After a lengthy period of very few changes in the payroll world, 2009 and 2010 have had changes at both the federal and state level.

Like many businesses, the State of Wisconsin is performing more functions electronically.  The State now requires the annual withholding reconciliation Form WT-7 to be filed electronically and has reduced the availability of the paper withholding deposit coupon, Form WT-6.  Wisconsin also replaced the EFT Registration and Payment system at the end of 2009 with My Tax Account.  My Tax Account has more functions and allows the taxpayer to manage their account information.

Wisconsin and Minnesota's reciprocity agreement ended at the beginning of 2010 affecting approximately 33,500 Wisconsin residents and 13,000 Minnesota residents.  If you have Minnesota residents working for you in Wisconsin, you should be withholding Wisconsin income tax.  If you do not have a business location in Minnesota, you may be able to inactivate your Minnesota withholding tax account.

At a federal level, Congress passed the Hiring Incentives to Restore Employment Act which eliminates the employer's share of Social Security tax (6.2% of compensation) for wages paid between March 18, 2010 and December 31, 2010 to employees hired after February 3, 2010 who haven't worked more than 40 hours in the prior 60 days.  There are few restrictions regarding which employees are eligible.  New employees should complete Form W-11 if they meet the requirements.

Congress extended the COBRA subsidy for workers involuntarily terminated between September 1, 2008 and May 31, 2010 and are considering extending it again.  Eligible workers receive a 65 percent subsidy of their COBRA premiums for up to 15 months.  Employees pay 35 percent of the premium, and employers pay the remaining amount.  Employers are reimbursed for their share on the quarterly payroll tax forms.

The US Treasury has also announced the elimination of federal tax deposit coupons, Form 8109-B, starting in 2011.  This will require businesses to make tax deposits electronically using the Electronic Federal Tax Payment System (EFTPS).  Very small employers may be allowed to pay the balances due when filing their tax returns.

If you have any questions regarding these recent payroll developments, please contact Robert Denkert.