Compliance Central

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.

The New York Department of Taxation and Finance announced that effective for tax year 2011, the rate of the city of Yonkers resident income tax surcharge has been increased from 10% to 15% of the net state tax.  As a result, the city of Yonkers resident income tax rate will increase from 0.977% to 1.4655% for tax year 2011.  All wages paid to a Yonkers resident are subject to personal income tax withholding even though the services may have been performed outside of Yonkers.  The online Withholding Tax Jurisdiction Lookup may be used as a guide to determine if an individual’s address is in the city of Yonkers for purposes of withholding.

Effective May 1, 2011, new withholding tables for the Yonkers resident income tax surcharge will be issued to ensure that the correct amount of Yonkers tax will be withheld for tax year 2011. Therefore, taxpayers should not need to adjust their Yonkers withholding for tax year 2011 because of the rate change. However, taxpayers that have requested their employers to withhold additional amounts of Yonkers tax using Form IT-2104, Employee’s Withholding Allowance Certificate, may choose to increase the additional amount withheld to account for the increase in the Yonkers rate.

The Yonkers nonresident earnings tax rate was not changed and will continue to be imposed at the rate of .5% on wages and net earnings from self-employment.

http://www.tax.ny.gov/pdf/memos/income/m11_2i.pdf

In the case of Jefferson County v. Weissman, et al., the Alabama Supreme Court has ruled that Jefferson County’s 2009 occupational tax law is unconstitutional.  On March 22, 2011, Jefferson County announced that effective immediately, employers should stop withholding the Jefferson County occupational tax from their employees’ paychecks.

Any amounts that have been withheld from employees but not yet remitted to the County should be paid back to the employees from whose paychecks the amounts were withheld.  It has not yet been determined when the amounts previously levied and collected under the invalidated statute will be refunded to employees.  This determination will be made by the Circuit Court of Jefferson County at a later date.

http://jeffconline.jccal.org/home/jcinfo/occ-tax0311A.pdf