Compliance Central

The Canada Revenue Agency (CRA) has released a draft version of the publication Payroll Deductions Formulas for Computer Programs – 94th Edition (t4127-11e-draft). This publication contains the formulas needed to determine federal, provincial (except Quebec), and territorial income taxes, Canada Pension Plan (CPP) contributions, and Employment Insurance (EI) premium deductions.

As some legislation is still pending regarding Federal and some provincial tax changes, this draft version has only been updated to reflect changes known as of May 16^th. These changes include new personal tax credit amounts for Manitoba, Nova Scotia and Saskatchewan as well as income tax rate bracket changes for New Brunswick.  A fully revised publication containing all changes effective July 1, 2011 is slated to be released around mid-June.

Visit the CRA website to access this publication as well as the previous version for tax changes effective January 1, 2011.

Budget bill (S.B. 1239), signed May 4 by Connecticut Governor Dan Malloy will increase personal income tax rates for tax year 2011.

The legislation increases marginal income tax rates for those with taxable incomes of more than $100,000 for joint filers; $50,000 for single filers and married filing separately; and $80,000 for heads of households.  According to a legislative analysis of the budget, the legislation does so by: 

• increasing the number of tax brackets from three to six;
• splitting the existing 5 percent bracket into four brackets and adding three higher marginal tax rates to that taxable income;
• increasing the top marginal income tax rate to 6.7 percent from 6.5 percent;
• and reducing the taxable income for the 6.7 percent rate bracket by half

The measure also phases out the lowest (3 percent) income tax bracket starting with Connecticut adjusted gross incomes of more than $100,500 for joint filers; $56,500 for singles; $78,500 for heads of household; and $50,250 for married couples filing separately.  The legislative analysis said it does so by subjecting increasingly less taxable income to the 3 percent income tax rate as Connecticut adjusted gross income increases and moving the phased-out taxable income to the 5 percent bracket.

The Department of Revenue Services plans to have new withholding tables available within a month.  Please visit the Connecticut DOR for more information.

The New York Department of Labor (DOL) has released official guidance on the New York Wage Theft Prevention Act which becomes effective on April 9, 2011. Under the Act, a new annual pay notice is required, additional information is required on employees’ wage statements and the civil and criminal remedies available for employer noncompliance are expanded.

Section 195 of the New York Labor Laws has been updated with the new requirements and pay notice templates for employers are available on the NY DOL website.  The DOL has also issued Frequently Asked Questions about the Wage Theft Prevention Act.   Visit www.labor.ny.gov for more information. 

On March 29, 2011, the Internal Revenue Service issued interim guidance to employers regarding the reporting on each employee’s annual Form W-2 of the cost of the health insurance coverage they sponsor for employees.  This new reporting to employees is for their information only, to inform them of the cost of their health coverage, and does not cause excludable employer-provided health coverage to become taxable.  Employer-provided health coverage continues to be excludable from an employee’s income, and is not taxable.

The Affordable Care Act provides that employers are required to report the cost of employer-provided health care coverage on the Form W-2.  Notice 2010-69 made this requirement optional for all employers for the 2011 Forms W-2, generally distributed in January 2012, to allow employers additional time to make the appropriate changes to their payroll systems.

Notice 2011-28, issued on March 29, provided further relief for smaller employers (those filing fewer than 250 W-2 forms) by making this requirement optional for them at least for 2012 Forms W-2, typically furnished to employees in January 2013.  This treatment for smaller employers would continue until further guidance is issued by the IRS. 
 
Notice 2011-28 also includes information for employers that are subject to this requirement for the 2012 Forms W-2 and those that choose to voluntarily comply with it for either 2011 or 2012. The notice includes information on how to report, what coverage to include and how to determine the cost of the coverage.

All guidance issued by the IRS can be found at www.irs.gov.