Compliance Central

Due to some privacy concerns regarding employees’ Social Insurance Numbers, the Canada Revenue Agency (CRA) has modified the newly redesigned laser T4A tax slip (T4A(10)) and posted a new version on their website on December 14, 2010. The new form number is T4A (12/2010).

Changes to the T4A include changing the position of boxes:

• 061 – Payer’s Account Number

• 012 – Social Insurance Number and

• 013 – Recipient’s Account number

These boxes were moved closer to the Payer’s Name box and further away from the Recipient’s Name and Address box to lessen the possibility that the Recipient’s Social Insurance Number could be visible through the window of a standard window envelope.

Accero Cyborg will be modifying its delivered Laser T4A program to print on this revised version of the T4A tax slip. Any Accero Cyborg client who has ordered their laser T4A tax slips (form code T4A(10)) from CRA will need to reorder the new T4A tax slip (form code T4A (12/2010)). The new T4A forms, according to the CRA website, will be available on December 22 , 2010.

Source: www.cra.gc.ca

The Circular E issued by the IRS states that employers are required to notify employees who have no federal income tax withheld that they may be eligible to claim a tax refund because of the Earned Income Tax Credit (EITC).  In general, employers can meet this requirement by issuing a Form W-2 with the EIC notice on the back of Copy B, or a substitute Form W-2 with the same statement.  Notice 797, Possible Federal Tax Refund Due to the Earned Income Credit (EIC), or a statement created by the employer that contains the same wording may also be provided as notification.

California, Illinois, New Jersey and Texas have further specific requirements regarding notifying employees of the EITC.

California

Employers must notify employees of possible eligibility for the EITC within one week before or after, or at the same time that the employer provides an annual wage summary, such as an IRS Form W-2 or Form 1099 to the employee. The notice must either be handed directly to the employee or mailed to their last known address.  The notification shall include instructions on how to obtain any notices available from the Internal Revenue Service such as the IRS Notice 797, or any successor notice or forms.

Illinois

Employers are required to notify all employees that they may be eligible for the federal EITC and how they receive the credit.  The employer must provide notification to the employee in person or by mail within one week before or after, or at the same time, that the employer provides a Form W-2 to employees.  Notification consists of either any notice available from the IRS regarding the EIC or any notice created by the employer that contains mostly the same language as IRS notifications.

New Jersey

New Jersey requires all public and private employers to give written notification to employees that may be eligible for the federal and New Jersey EITC.  The notification must be distributed between January 1 and February 15 of each year to coincide with the employer’s distribution of the wage and tax withholding statement. The written notification must use the statement developed by the State Treasurer.

Texas

Employers must notify all of their employees of the federal EITC general eligibility requirements, no later than March 1 of each year, in one of the following ways:

• In person
• Electronically at the employee’s last known email address
• Through a flyer included as a payroll stuffer
• By mail at the employee’s last known address

Employers may use IRS Notice 797, or a written statement with the same wording as IRS Notice 797 when notifying employees.