Expert Newswire

Payroll Tax Cut Temporarily Extended into 2012

Fri, 30 Dec 2011 22:09:00 GMT

The Temporary Payroll Tax Cut Continuation Act of 2011 temporarily extends the two percentage point payroll tax cut for employees, continuing the reduction of their Social Security tax withholding rate from 6.2 percent to 4.2 percent of wages paid through Feb. 29, 2012. This reduced Social Security withholding will have no effect on employees’ future Social Security benefits.

According to irs.gov, under the terms negotiated by Congress, the law also includes a new “recapture” provision, which applies only to those employees who receive more than $18,350 in wages during the two-month period (the Social Security wage base for 2012 is $110,100, and $18,350 represents two months of the full-year amount). This provision imposes an additional income tax on these higher-income employees in an amount equal to 2 percent of the amount of wages they receive during the two-month period in excess of $18,350 (and not greater than $110,100).

This additional recapture tax is an add-on to income tax liability that the employee would otherwise pay for 2012 and is not subject to reduction by credits or deductions. The recapture tax would be payable in 2013 when the employee files his or her income tax return for the 2012 tax year. With the possibility of a full-year extension of the payroll tax cut being discussed for 2012, the IRS will closely monitor the situation in case future legislation changes the recapture provision.

The IRS will issue additional guidance as needed to implement the provisions of this new two-month extension, including revised employment tax forms and instructions and information for employees who may be subject to the new “recapture” provision. For most employers, the quarterly employment tax return for the quarter ending March 31, 2012, is due April 30, 2012.

As a Payroll Experts' client, you and your employees will not need to do anything differently to take advantage of this extension, or when filing your company's payroll tax returns. Employees should be aware however, that if subject to the recapture, they will need to handle the repayment when filing their personal tax returns.

For more information or if you have questions, don't hesitate to contact your Payroll Expert.

Arizona Minimum Wage Increasing and more

Fri, 30 Dec 2011 16:39:00 GMT

Effective January 1, 2012, Arizona's minimum wage will be increasing $.30 per hour making the new minimum wage $7.65. There is no change in the federal tip credit of $3.00 making the allowable minimum wage for tipped employees $4.65.

Florida's minumum wage is rising as of January 1, 2012 to $7.67. If you have any questions regarding additional states' minimum wage changes, please contact your Payroll Expert.

As a client of Payroll Experts, we will automatically be increasing any minimum wage employees' rates to the new state required rates effective January 1, 2012. If you would like to discuss how this will affect your business, please do not hesitate to contact your Payroll Expert.

Evolution Update and Temporary Down Time to Occur Weekend of 11-18-11

Wed, 23 Nov 2011 22:51:00 GMT

To our Valued Clients,

Payroll Experts is excited to announce the release of the next update to Evolution! This update will occur the weekend of November 18th-November 20th. Please note that remote access to Evolution will be temporarily unavailable during this time. Our scheduled down time will begin this Friday, November 18th at 8 p.m. MST and will end no later than 8 a.m. MST, Monday, November 21st.

You will notice enhancements to Employee Self Serve, upgraded dependent and benefit tracking and updates to the Favorite Reports section of the solution (just to name a few)!

Additionally, a handful of buttons and tabs have been relocated to assist in streamlining your process even further. Please see below for additional details.

As always, if you have any questions, don’t hesitate to contact your Payroll Expert. Thank you for being a part of the Payroll Experts’ family!

Here is a quick overview of some details of the update:

If you access your account via our RemoteClient solution, you will notice:

1. Client --> Benefits has been moved to Company --> Benefits --> Benefits.
2. Favorite Reports have their own screen now (Reports --> Favorite Reports).
3. Two new fields on the Employee --> Employee --> EE Entry tab (Dependent Benefits Available, Eligible for Benefits).
4. New screen for approving time off requests: Company --> Benefits --> ESS Time Off Management.
5. Employee Self Service attributes/settings have been moved from the Employee --> Employee --> Address tab to Employee --> Employee --> Self Serve tab. Also, new attributes/settings have been added.

If you utilize Employee Self Serve (ESS), you will notice:

1. Additional Info can now be displayed in ESS (see Company --> General --> Additional Info for more info).
2. Paystubs can be shown prior to check date (see Company --> General --> Company Info --> Checks tab).
3. Items can be hidden from ESS by switching the corresponding Access Level to No.

If you access your account via our WebClient solution, you will notice:

1. New Main Menu.
2. New Add/Edit Employee screen.
3. Employee editing has been revamped for your ease of use.

Valued Arizona Clients: SA and JTT Taxes to be debited Sept. 7th, 8th and 9th

Wed, 23 Nov 2011 22:54:00 GMT

Valued Arizona Clients:

We will be picking up your YTD Special Assessment tax and any owed Job Training Tax (JTT) this Sept. 7th, 8th and 9th! Please check your email and payroll package for details. We will be communicating the total amount due via a personal phone call next week. Please contact your Payroll Expert with any questions.

Healthcare Reform: Women's Preventive Care

Wed, 23 Nov 2011 22:52:00 GMT

Recently, the Department of Health and Human Services (HHS) released additional information guidelines that expand preventative services for women. The reasoning was that women have unique health needs and higher rates of chronic disease such as diabetes, heart disease and stroke.

What is covered?
As with the current preventive care coverage requirements, health plans will be required to cover these additional preventive services with no copay, coinsurance or deductible for the patient. The following items are included in the expanded coverage:

Well-woman visits (annual preventive care visit for adult women to obtain recommended preventive services)
Gestational diabetes screening for women 24 to 28 weeks pregnant, and women at high risk
Human Papillomavirus (HPV) testing for women 30 and older, once every three years
Annual counseling for HIV and sexually transmitted infections for all sexually active women, plus annual HIV testing
Contraceptives and contraceptive counseling
Breastfeeding support, supplies and counseling
Domestic violence screening

Be sure to check your plan's specific rules before receiving care. These new rules only apply to non-grandfathered health plans. Though plans are required to provide these services free of charge, they do have the option to use cost-controlling measures, such as making you pay for a brand name drug if a comparable generic is available, or charging a copayment for preventive services received at an out-of-network facility.

When does this take effect?
These new rules take effect for plans beginning after August 1, 2011.

Questions?
Contact Payroll Experts' Benefit Partner, Dan Weinstein at 602.956.5515 or dweinstein@abcllc.org, or as always, contact your Payroll Expert.

All AZ Employers subject to SUI now subject to Job Training Tax (JTT) of 0.10 percent

Wed, 23 Nov 2011 22:52:00 GMT

The Federal Unemployment Tax (FUTA) rate was reduced to 6.0% effective July 1, 2011. This makes all employers who are subject to Arizona Unemployment Insurance (UI) Tax also subject to the 0.10% Arizona Job Training Tax (JTT) on taxable wages they pay after June 30, 2011. (“Taxable wages” are the first $7,000 of gross wages paid to each employee in a calendar year.)

The JTT funds the Arizona Job Training Program administered by the Arizona Commerce Authority. It is payable to the Arizona Department of Economic Security with employers' quarterly UI Tax and assessed on the same taxable wage base, i.e., the first $7,000 of gross wages paid to each employee each calendar year.

Therefore, ALL tax-rated employers, regardless of their UI Tax rate and whether they are “new employers” or experience-rated, are subject to JTT on taxable wages they pay after June 30, 2011. (Employers who were exempt from JTT in the first and second quarters of 2011 continue to be exempt from JTT on taxable wages they paid in those quarters. In other words, for 2011: (1) if such an employer did not meet the $7,000 taxable wage base of an employee in the first or second quarter, the employer is subject to JTT only on taxable wages paid to that employee in the third and fourth quarter; (2) if the employer did meet the taxable wage base of an employee in the first or second quarter, the employer is not subject to JTT on wages paid to that employee in the third or fourth quarter.)

As a Payroll Experts' client, we have you covered! If you have any additional questions, you may call your Payroll Expert or visit https://www.azdes.gov/main.aspx?menu=316&id=6854 for the Arizona Department of Economic Security website and more details.

Arizona .40 % Special Assessment Effective July 20, 2011

Wed, 23 Nov 2011 22:55:00 GMT

House Bill 2619, which imposes a Special Assessment (SA) on taxable wages paid in 2011 and 2012, becomes law (Arizona Revised Statutes § 23-730.01) effective July 20, 2011, but is retroactively effective to January 1, 2011. The DES Unemployment Insurance (UI) Tax Section is responsible for collecting the SA according to the following provisions.

All employers subject to Arizona UI Tax in 2011 and 2012 are also subject to the SA.

Reimbursement employers are exempt from the SA.

“Taxable wages” are the first $7,000 of gross wages paid to each employee in a calendar year.

The SA rate is 0.40% of taxable wages paid in 2011 (maximum $28 per employee).

The SA rate is projected to be 0.60% of taxable wages paid in 2012 (maximum $42 per employee).

Payment of the SA for the first three quarters of 2011 is due by October 31, 2011.

As a Payroll Experts' client, your tax calculations are updated automatically and the SA will be paid by Payroll Experts on your behalf in accordance with the stipulations for payment.

For more information, contact your Payroll Expert at 480.302.6444 or visit the Arizona Department of Economic Security website at https://www.azdes.gov/main.aspx?menu=316&id=6767

IRS Increases Mileage Rate to 55.5 Cents per Mile

Wed, 23 Nov 2011 23:02:00 GMT

The Internal Revenue Service today announced an increase in the optional standard mileage rates for the final six months of 2011. Taxpayers may use the optional standard rates to calculate the deductible costs of operating an automobile for business and other purposes.

The rate will increase to 55.5 cents a mile for all business miles driven from July 1, 2011, through Dec. 31, 2011. This is an increase of 4.5 cents from the 51 cent rate in effect for the first six months of 2011, as set forth in Revenue Procedure 2010-51.

In recognition of recent gasoline price increases, the IRS made this special adjustment for the final months of 2011. The IRS normally updates the mileage rates once a year in the fall for the next calendar year.

"This year's increased gas prices are having a major impact on individual Americans. The IRS is adjusting the standard mileage rates to better reflect the recent increase in gas prices," said IRS Commissioner Doug Shulman. "We are taking this step so the reimbursement rate will be fair to taxpayers."

While gasoline is a significant factor in the mileage figure, other items enter into the calculation of mileage rates, such as depreciation and insurance and other fixed and variable costs.

The optional business standard mileage rate is used to compute the deductible costs of operating an automobile for business use in lieu of tracking actual costs. This rate is also used as a benchmark by the federal government and many businesses to reimburse their employees for mileage.

The new six-month rate for computing deductible medical or moving expenses will also increase by 4.5 cents to 23.5 cents a mile, up from 19 cents for the first six months of 2011. The rate for providing services for charitable organizations is set by statute, not the IRS, and remains at 14 cents a mile.

The new rates are contained in Announcement 2011-40on the optional standard mileage rates.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

Mileage Rate Changes

Purpose	Rates 1/1 through 6/30/11	Rates 7/1 through 12/31/11
Business	51	55.5
Medical/Moving	19	23.5
Charitable	14	14

FUTA Surcharge

Wed, 23 Nov 2011 23:03:00 GMT

Employers are currently required to pay a flat rate of 6.2% on the first $7,000.00 of each employee’s annual wages for FUTA. Employers receive a credit of 5.4% for paying state unemployment on time, reducing the 6.2% to .8% resulting in an maximum annual FUTA payment of $56.00 for each employee with annual earnings of at least $7,000.00 ($7,000.00 × .8% = $56.00).

The 6.2% FUTA rate includes a temporary .2% surcharge that was first added in the 1970’s. This temporary surcharge has been extended many times over the past three decades. The last extension, set to expire effective 7/1/2011, was included in The Worker, Homeownership and Business Assistance Act of 2009 signed into law on November 6, 2009. If congress does not extend this surcharge before June 30, 2011 the FUTA rate will be reduced from 6.2% to 6.0% effective July 1, 2011. Employers will still receive the 5.4% credit for paying state unemployment on time, reducing the FUTA rate to .6% on wages paid up to the annual FUTA limit of $7,000.00.

At the present time it is unknown whether this surcharge will be extended before June 30, 2011. In anticipation that this surcharge is not extended, the IRS is currently working to revise Form 940 (Employer’s Annual Federal Unemployment (FUTA) Tax Return) to accommodate the two different FUTA rates for calendar year 2011.

It is possible that this surcharge will be extended at a later date in 2011 retroactive back to July 1, 2011. If the extension is passed after the third quarter payments are made, the IRS has stated that there will not be any penalties to employers for any underpayments because of this retroactive extension.

IRS Operations During A Government Shutdown

Wed, 23 Nov 2011 23:02:00 GMT

If the federal government shuts down, IRS operations will be severely limited. However, the underlying tax law remains in effect, and all taxpayers should continue to meet their tax obligations as normal.

Individuals should keep filing their tax returns with the IRS and are required to do so by April 18 unless they obtain a six-month extension. The IRS will be accepting all tax returns. Once they’ve been accepted, the IRS will generally process and issue refunds for electronically filed individual returns.

Individuals are urged to file electronically, because most of these returns are processed automatically and should not be delayed. Because of limited IRS staffing, paper returns will be accepted, but will not be processed in the event of a government shutdown and taxpayers who file paper returns will experience a delay in receiving their refunds. Limited telephone customer service functions will remain available, but IRS walk-in taxpayer assistance centers will be closed.

While the government is closed, people with appointments related to examinations (audits), collection, Appeals or Taxpayer Advocate cases should assume their meetings are cancelled. IRS personnel will reschedule those meetings at a later date.

Here are some basic steps for taxpayers to follow in case of a government shutdown:

How Does This Affect Me? What Do I Do?

You should continue to file and pay taxes as normal.
The April 18, 2011, tax deadline for filing the 1040 series of tax returns remains in effect.
Individuals filing the 1040 series of returns can still request a six-month filing extension to Oct. 17 by filing Form 4868. Taxpayers who request a filing extension must still make their tax payments by April 18, 2011.
The quarterly estimated tax payment due April 18 is unchanged.
All other tax deadlines remain in effect, including those covering individuals, corporations, partnerships and employers. The regular payroll tax deadlines remain in effect as well.
You can file your tax return electronically or on paper –– although the processing of paper returns will be delayed until full government operations resume. Payments accompanying paper tax returns will still be accepted as the IRS receives them.
Tax refunds for most electronically filed returns will continue to be issued. Because of limited IRS staffing, taxpayers who file paper returns will experience a delay in receiving their refunds.
Tax software companies, tax practitioners and Free File remain available to assist with taxes.
State tax deadlines are not impacted by the federal government shutdown.

What Will Happen At The IRS If The Government Shuts Down?

Only the most basic functions will remain operating in light of the critical April 18 filing deadline.

Operations Available

During the Government Shutdown

Tax processing operations are continuing at this time for electronically filed 1040 series tax returns.

Tax refunds will be issued as returns are processed, so most tax refunds for electronically filed returns will be issued. Taxpayers should expect longer than normal delays for paper filed tax refunds. IRS e-file and Free File remain the best way of getting tax refunds quickly and are unaffected by the government shutdown.

Tax deposits and payments are being processed, both for electronic and paper tax returns. Taxpayers should continue to make these payments as normal.

The IRS will continue accepting all tax returns during this period. In addition to individual e-file, business e-file will remain open as well and refunds for business e-filers will continue.

For individual taxpayers seeking assistance, the regular 800-829-1040 telephone line remains open. However, this line will not accept calls unrelated to individual tax issues, and taxpayers should anticipate much longer wait times. As an alternative, taxpayers are strongly encouraged to use www.IRS.gov.

The IRS website, www.IRS.gov, will remain available, although some interactive features may not be available. ”Where’s My Refund” will remain available on the IRS website for people to check on the status of their tax refunds.

If people have already filed their return and the IRS has started processing their tax return, they generally will see no delays in their refunds being issued. The best source for information will be checking "Where's My Refund" at www.IRS.gov.

The IRS Free File partners will continue to accept and file tax returns.

Tax software companies will continue to accept and file tax returns.

The IRS Volunteer Income Tax Assistance Program (VITA) and the Tax Counseling for the Elderly (TCE) Programs will remain open in many locations to offer free tax help for taxpayers who qualify. Many Low-Income Taxpayer Clinics will remain open.

Many automated IRS notices will continue to be mailed.

Operations Closed

Or Unavailable During a Government Shutdown

(Partial Listing)

Taxpayer Assistance Centers (TACs) where taxpayers walk-in for service will be closed. People with scheduled appointments during the government shutdown will have to reschedule.

No live telephone assistance will be available for non-1040 series business taxpayers on the 800-829-4933 number.

No live telephone assistance will be available for exempt organizations, retirement plans administrators or governmental entities that use the 877-829-5500 number.

The phone number for victims of identity theft (800-908-4490) will not be available.

The IRS will not be working any paper correspondence during this period.

Most IRS legal counsel services will stop.

Information for Tax Practitioners

The e-Help Desk will be available for e-file error reject code assistance only -- Monday through Friday from 6:30 a.m. to 5:00 p.m. Central Time.

The Practitioner Priority Service line will not be available.

Quick Alerts will be issued as necessary via the normal e-mail process.

Employee Social Security Credit Effective January 1, 2011

Wed, 23 Nov 2011 23:00:00 GMT

The Internal Revenue Service released instructions to help employers implement the 2011 cut in payroll taxes, along with new income-tax withholding tables that employers will use during 2011.

Millions of workers will see their take-home pay rise during 2011 because the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 provides a two percentage point payroll tax cut for

employees, reducing their Social Security tax withholding rate from 6.2 percent to 4.2 percent of wages paid. This reduced Social Security withholding will have no effect on the employee’s future Social Security benefits.

The new law also maintains the income-tax rates that have been in effect in recent years.

As your payroll service provider, Payroll Experts will start using the new withholding tables and reducing the amount of Social Security tax withheld from the employee’s pay with your first check date in 2011.

Notice 1036, contains the percentage method income tax withholding tables, the lower Social Security withholding rate, and related information that most employers need to implement these changes. Publication 15, (Circular E), Employer’s Tax Guide, containing the extensive wage bracket tables that some employers use, will be available on IRS.gov in a few days.

The IRS recognizes that the late enactment of these changes makes it difficult for many employers to quickly update their withholding systems. As a client of Payroll Experts, you can rest assured that we will handle the withholding changes, so you and your employee’s won’t need to take any additional action, nor will your employees need to fill out a new W-4 withholding form.

As always, however, Payroll Experts urges workers to review their withholding every year and, if necessary, fill out a new W-4 and give it to their employer. For example, individuals and couples with multiple jobs, people who are having children, getting married, getting divorced or buying a home, and those who typically wind up with a balance due or large refund at the end of the year may want to consider submitting revised

W-4 forms. Publication 919, How Do I Adjust My Tax Withholding?, on IRS.gov provides more information to workers on making changes to their tax withholding.

Employer-Provided Health Coverage

Wed, 23 Nov 2011 23:01:00 GMT

Employer-Provided Health Coverage — Not Taxable; Reporting Requirement Optional in 2011
Starting in tax year 2011, the Affordable Care Act requires employers to report the value of the health insurance coverage they provide employees on each employee's annual Form W-2. However, to provide employers the time they need to make changes to their payroll systems or procedures in preparation for compliance with this requirement, the IRS will defer the reporting requirement for 2011, making that reporting by employers optional in 2011.
The revised Form W-2 for 2011 is now available in draft for viewing. This is the W-2 that most employees will receive in early 2012. The draft form includes the codes that employers may use to report the cost of coverage under an employer-sponsored group health plan.

This reporting is for informational purposes only, to show employees the value of their health care benefits so they can be more informed consumers. The amount reported does not affect tax liability, as the value of the employer contribution to health coverage continues to be excludible from an employee's income, and it is not taxable.

IRS Releases Draft W-2 Form for 2011; Announces Relief for Employers

IR-2010-103, Oct. 12, 2010

WASHINGTON — The IRS today issued a draft Form W-2 for 2011, which employers use to report wages and employee tax withholding. The IRS also announced that it will defer the new requirement for employers to report the cost of coverage under an employer-sponsored group health plan, making that reporting by employers optional in 2011.
The draft Form W-2 includes the codes that employers may use to report the cost of coverage under an employer-sponsored group health plan. The Treasury Department and the IRS have determined that this relief is necessary to provide employers the time they need to make changes to their payroll systems or procedures in preparation for compliance with the new reporting requirement. The IRS will be publishing guidance on the new requirement later this year.
Although reporting the cost of coverage will be optional with respect to 2011, the IRS continues to stress that the amounts reportable are not taxable. Included in the Affordable Care Act passed by Congress in March, the new reporting requirement is intended to be informational only, and to provide employees with greater transparency into overall health care costs.

New Employer W-2 Form

Wed, 22 Sep 2010 17:55:00 GMT

Beginning in tax year 2011, the PPACA requires employers to report the value of the health care benefits they provide to employees on each employee’s annual Form W-2. This reporting is for informational purposes only, to show employees the value of their health care benefits. The amount reported does not affect tax liability, as the value of the employer contribution to health coverage continues to be excludible from an employee’s income and it is not taxable.

This new reporting requirement applies for employees’ tax years beginning after December 31, 2010. Because employees are entitled to request their Form W-2 early if they terminate employment during the year, payroll systems need to be updated for this change by January 2011.

While most W-2s for tax year 2011 will be issued in January 2012, W-2s reflecting the new health insurance information must be available no later than February 1, 2011 for any terminating employee. It is important to note that the cost of an employee’s health benefits will not be included in the employee’s taxable income. The W-2 reporting will be a way to track coverage values for the excise tax (starting in 2018) on “high cost” employer based medical coverage above certain thresholds (the so called “Cadillac plan tax”). The coverage costs must be reported under the new requirement.

Employer sponsored health insurance includes any coverage under any group health plan made available to employees which is excludable from the employee’s gross income.

The coverage costs under the IPHFHA, Inc. Group Health program would include only the medical and dental premiums.

Benefits exempt from Form W-2 reporting requirements are:

·                     Coverage only for accident and disability income insurance

·                     Life insurance

·                     Workers’ compensation

·                     Automobile medical payment insurance

·                     Credit-only insurance

·                     Long-term care

·                     Archer MSAs and HSA

·                     Salary reduction contributions to a flexible spending arrangement

Employers will not be required to provide a specific breakdown of the various types of coverage, but must only report an aggregate cost. For example, if an employee enrolls in medical and dental, the employer only has to report the total value of all coverage, not a value for each individual benefit.

This information is for educational purposes only. Please refer to your tax advisor for additional information or guidance.

New AZ Withholding structure result in a 5.9% increase in SWT deductions

Wed, 23 Nov 2011 23:01:00 GMT

As all employers and most employees are now aware, effective July 1, 2010 the state of Arizona has changed how state withholding (SWT) taxes are calculated. For many years the SWT was based on a rate that each employee elected as a percentage of the employee’s Federal Withholding Tax (FWT). Employees could have elected a high percentage rate for SWT so that they did not come up short when they filed their annual tax return but if their FWT deduction was low (FWT is calculated using tables and is based on the gross pay amount, marital status, exemptions and pay frequency), they might have had little or no SWT deducted from their paycheck.   The new SWT calculation is based directly on Gross Wages not FWT, so employees that have elected a rate other than zero will now see State Withholding on their check where they may not have in the past.

The figures are based on a sampling of 225 AZ based companies of varying size and approximately 7,000 employees and 23,440 paychecks. They include non-exempt (hourly) and exempt (salaried) employees and both white and blue collar employees (professional law firms as well as manufacturing).
Here is what we found:

1.   Overall the paycheck SWT has increased by approximately 5.9%

2.   For employees with gross pay up to $500.00 the SWT rate went up 504% from 0.4% to 2.04% (most employees had no SWT under the old percentages and most had SWT under the new).

3.   For employees with gross pay from $500.01 to 1500.00 the SWT rate went up 106% from 1.31% to 2.69%

4.   For employees with gross pay from $1500.01 to 3000.00 the SWT rate went up 117% from 2.66% to 3.10%

5.   For employees with gross pay from 3000.01 – 10,000.00 the SWT rate went down 20% from 4.15% to 3.36%.

Conclusion: I wasn’t able to find the exact 2009 SWT figure but at an estimated $3bb the net increase would be $117mm. Those most impacted are low wage earnings, most of which had little or no SWT deducted under the old method almost all have some deductions under the new rule. The increases are lower as the wages go up until you see a slight decrease for the highest wage earners.
The overall increase against claims that the state will be issuing I.O.U’s for 2010 refunds paints an interesting picture?

Jason Roth, President, Payroll Experts LLC

Jobs Bill

Wed, 23 Nov 2011 23:01:00 GMT

NEW YORK (CNNMoney.com) -- Amid much fanfare at the White House, President Obama signed his first job creation bill Thursday.

The $17.6 billion measure calls for tax breaks for businesses and additional infrastructure spending with the hope of boosting employment.

This is the first jobs legislation to hit the president's desk since he trumpeted the need to spur hiring during January's State of the Union address. It took weeks to get the bill through Congress. However, it is viewed by some lawmakers, economists and business leaders as relatively small and ineffective.

The legislation will:

-- Exempt employers from Social Security payroll taxes on new hires who were unemployed.

-- Fund highway and transit programs through 2010.

-- Extend a tax break for business that spend money on capital investments, such as equipment purchases.

-- Expand the use of the Build America Bonds program, which helps states and municipalities fund capital construction projects.

The bill is a slimmed down version of an $85 billion bipartisan measure crafted by the Senate Finance Committee last month. Senate Majority Leader Harry Reid, D-Nev., stripped out these four measures and put them into a separate bill, saying he hoped lawmakers would approve it more quickly. It passed the Senate on Feb. 24.

However, it then had to go to the House, which added two provisions to pay for the infrastructure spending and corporate tax breaks. Its amendments require foreign financial institutions to give the Internal Revenue Service more information to help it catch tax cheats, and delays a tax break for foreign interest payments. The House sent it back to the Senate in early March.

Meanwhile, the House on Wednesday passed a bill that would extend the deadline to file for unemployment benefits by one month, through May 5, and several other expiring provisions through April 30.

Job creation focusWe do not currently know how the mechanics of the credits will work. The IRS will release the details about how to determine if an employee had been unemployed for the 2 month requirement and how exactly to take advantage of the credits. As soon as these details are released we will inform our community……

The president and lawmakers have vowed to push measures that will spur job creation, as the economy continues to lose jobs and the unemployment rate stubbornly remains at 9.7%.

"It is the first of what I hope will be a series of jobs packages that help to continue to put people back to work all across America," Obama said after the bill's passage.

But the initiatives are having a tough time getting through Congress. Wednesday's jobs measure has been criticized as having little bang for the buck.

The centerpiece of the legislation is a hiring tax credit crafted by Senators Chuck Schumer, D-N.Y., and Orrin Hatch, R-Utah. The bill spares businesses from paying Social Security taxes on new hires who had been unemployed for at least 60 days. This tax, which comes to 6.2%, could save companies a maximum of $6,621.

Companies who retain these new employees for a year can claim an additional credit of the lesser of $1,000 or 6.2 percent of the wages paid to the employee in 2010. The measure's estimated cost is $13 billion over 10 years.

Some economists say the credit will prompt the hiring of 300,000 workers, while others say it will only help at the margin because companies won't hire unless they see an increase in demand, regardless of tax incentives.

Additional initiatives being considered include giving more tax breaks to companies and funneling more money to the states, which are contemplating big spending cuts to balance their budgets. Others, however, are concerned that these measures will only add to the sky-high federal deficit. Democrats countered that the legislation is fully paid for.

Meanwhile, the deadline to apply for extended unemployment benefits runs out in coming weeks. The House has to consider a roughly $140 billion bill that would push back the deadline until year end, extend a bevy of expired tax measures and send the states $25 billion to help fund its Medicaid obligations.

In the House, several jobs bills are forming, while Senate Democratic leaders say their next jobs initiative will be targeted at small businesses.

"This is just the first, certainly not the last, piece of legislation we will put forward," Schumer said.

..................................................................................................................................................................

We do not currently know how the mechanics of the credits will work. The IRS will release the details about how to determine if an employee had been unemployed for the 2 month requirement and how exactly to take advantage of the credits. As soon as these details are released we will inform our community…… Jason Roth, CPP - Payroll Experts