A blog recapping some of the more interesting stories in payroll from the prior week, such as: $1.9 trillion COVID-19 bill, calls for a $15 federal minimum wage silenced for now, the teleworking issue, IRS forms and publications, and state and local news.
Hello payroll professionals and welcome to the first edition of Last Week in Payroll.
Monday we observe President’s Day, and our 46th President has been making headlines of late with his $1.9 trillion COVID-19 plan being recently included in the Democrats budget resolution (Senate Concurrent Resolution No. 5) that provides for supplemental unemployment benefits and other pandemic relief. A vote back on February 5, 2021 allows the legislation to be fast-tracked without Republican support, but it has been said that a final version of the bill will not hit President Biden’s desk until mid-March 2021.
Calls for $15 Minimum Wage Silent for Now
President Biden’s call for a $15 federal minimum wage is one of the items from his COVID-19 plan that did not make the U.S. Senate’s cut during its amendment process on February 5, 2021..at least not right now.
The current national minimum wage is $7.25 per hour and that increase took effect during the summer of 2009. Of course, a number of states and localities have already passed minimum wage rate laws that incrementally increase the dollar amount past the $7.25 national wage rate – Florida even recently voted on a gradual $15.00 per hour minimum wage hike in the November 3, 2020 election.
That said, the Biden Administration wants to see a $15.00 national minimum wage by 2025 and noted during a January 22, 2021 speech that the increase would help bring all Americans above the poverty line. And a February 8, 2021 Congressional Budget Office (CBO) report looks to confirm that such a rate hike would raise some 900,000 people out of poverty, but would also put 1.4 million Americans out of work.
Senator Joni Ernst’s (R-IA) amendment on February 5, 2021 to prohibit a federal minimum wage increase puts up a temporary roadblock to more than doubling the federal minimum wage by 2025 by not permitting any such increases during the COVID-19 pandemic. “A $15 federal minimum wage would be devastating for our hardest-hit businesses at a time when they can least afford it,” Ernst said on the Senate floor.
The Teleworking Issue
The Democrats’ budget resolution had many amendments introduced to it in the Senate on February 5, 2021, including a topic that has been on the minds of many payroll professionals during the COVID-19 pandemic – teleworking. Senator Thune (R-SD) introduced an amendment on the topic to the budget resolution and noted in a press release that it is based on his bipartisan legislation, the Remote and Mobile Worker Relief Act of 2020. The aim is to: “address potential problems remote workers are facing during the COVID-19 pandemic, including the possibility of having their state income taxes become out of balance because they worked from home in a different state than their ordinary place of employment.”
Some states have weighed in on the issue with legislation and guidance and the Supreme Court is currently seeking clarification from the Biden Administration on the treatment of taxable income for work performed remotely during the pandemic.
IRS Forms and Publications
Now let’s switch gears a little and get into a subject that the IRS has been doing a lot of lately – revising forms and publications. Due to the COVID-19 pandemic, the IRS has been updating various payroll-related forms and publications in response to federal COVID-19 legislation – most recently from the Consolidated Appropriations Act, 2021. But one of the Service’s more anticipated annual publications was issued early last week – Publication 15 (Circular E) Employer’s Tax Guide.
This publication previously contained federal income tax withholding tables and percentage methods until the Tax Cuts and Jobs Act of 2017 required significant changes to the Form W-4, Employee’s Withholding Certificate, and subsequently made way for the creation of new Publication 15-T, Federal Income Tax Withholding Methods, where these tables are currently located.
The 2021 final version of Publication 15 is pretty similar to the draft version issued in December of 2020 and notes some items of importance like Certified Professional Employer Organizations (CPEOs) must e-file Forms 941, Employer’s Quarterly Federal Tax Return, beginning in 2021 (except for the first quarter the CPEO was certified). CPEOs were supposed to e-file in 2020 but were given a temporary break from the requirement due to the numerous changes as a result of COVID-19 legislation.
The IRS also updated the 2021 instructions for Forms W-2 and W-3 and cautioned that employers may have a discrepancy when reconciling Forms W-2 and W-3 to Forms 941 and other employment tax forms if the employer utilized any of the COVID-19 tax relief in 2020.
Additionally, the IRS put of out a final version of the instructions for Form 7200, Advance Payment of COVID-19 Tax Credits, and issued a warning to employers submitting the form that it is not for retroactively claiming these credits. Apparently, the IRS has needed to reject several submitted Forms 7200 for just this reason.
State and Local News.
In state payroll news, California signed memos of understanding with five earned wage access companies, which gives employees access to wages they earned but have not yet received through their employer payroll and can be used as an alternative to payday lending. Also in the Golden State, more guidance has been issued on the new pay data requirement for certain employers. The deadline for the 2020 pay data information is March 31, 2021, and the portal for submitting the pay data opens on February 15, 2021.
In addition, some California localities have started requiring certain grocery stores to pay employees hazard pay in addition to their wages due to the COVID-19 pandemic. Oakland is a city that recently passed such an ordinance calling for an additional $5 per hour in hazard pay from large grocery stores. The California Grocers Association almost immediately filed a lawsuit against the ordinance and also filed one against Sonoma County for its new requirement to pay an additional $4.00 per hour to certain grocery store workers.
In Hawaii, legislation passed the state’s House of Representatives that would roll back unemployment tax rates for 2021. The schedule used to determine tax rates in 2021 increased and this bill would roll back the increases on the Aloha State a bit. Washington State is also considering similar legislation that would offer unemployment tax relief to employers in the Evergreen State like not charging employers for unemployment benefits paid for the one-week waiting period among other provisions that would provide aid to employers.
And the Missouri Department of Revenue issued Form 5841, which is an affidavit for withholding based on the primary work location to be used by any employer who did not maintain a time and attendance system for all of 2020. Something for certain Show Me State employers to keep in mind.
Knowing Where to Find Information
In closing up this first edition of Last Week in PAYROLL, I am reminded of the following quote by Albert Einstein: “Intelligence is not the ability to store information, but to know where to find it.”
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