Welcome to the April issue of the Mize Payroll Newsletter! Our goal is to keep you informed of things you need to be doing as an employer, both on the federal and state level. Here are some highlights of what’s going on this month:

Beware of ERC Fraud

Between frequent TV commercials and spam emails, you’ve probably heard a lot about Employee Retention Credits (ERC) lately. Criminals have been aggressively marketing fraudulent claims about the ERC, claiming that employers are missing out on thousands of dollars.

If it sounds too good to be true, it usually is, so don’t be misled. The ERC was available to a limited group of businesses as part of pandemic-relief legislation. If properly claimed, the ERC is a refundable tax credit designed to assist businesses that shut down or had reduced receipts during the eligibility period but continued to pay employees. The eligibility period ended on December 31, 2021.

In some cases, the companies marketing ERC gather personally identifiable information about companies and business owners in order to conduct further financial crimes. The IRS has stepped up audit and criminal investigations targeted at ERC fraud, along with other schemes that increase the chances that taxpayers could become victims of identity theft.

Mize has worked extensively with our clients to claim appropriate ERC tax relief. If you have questions about your company’s specific situation, contact your Mize relationship manager.

DOL Updates Fact Sheet for Tipped Employees

If your business has tipped employees, you might want to check out the Department of Labor’s updated Fact Sheets #15 and #15A. Updates include clarifying that employers cannot keep any portion of employee tips, whether directly or through a tip pool, and regardless of whether the employer uses the tip credit. It also discusses situations where tip pools can be shared between employees who receive tips and employees who do not traditionally receive tips such as kitchen staff.

Do Wellness and Nutrition Expenses Qualify for HSAs and FSAs?

The IRS has created a set of Frequently Asked Questions (FAQs) that assist in identifying qualifying medical expenses for tax purposes. This assists employers and employees in determining whether things like gym memberships, weight-loss programs, and substance-abuse treatment can be reimbursed through health savings accounts (HSAs), flexible spending arrangements (FSAs), and health reimbursement arrangements (HRAs). You can view the FAQs by clicking here.

Extended Tax Deadlines Due to Storms

Individual and business taxpayers in Tennessee, Arkansas, Mississippi, New York, Alabama, Georgia, and California can take advantage of tax relief provisions announced by the IRS.

State News

Colorado

Employers who missed taking payroll deductions for the state’s new Family and Medical Leave Insurance (FAMLI) program since it began January 1, 2023 cannot take those contributions from employee paychecks retroactively. Instead, the employer is responsible for paying the employee’s share of missed premiums.

Illinois

Beginning January 1, 2024, most Illinois employees will be entitled to 40 hours of paid leave per 12-month period for any reason. We’ll keep you posted about employer requirements as they are finalized.

Minnesota (Bloomington)

The city of Bloomington, MN Earned Sick & Safe Leave (ESSL) program begins July 1, 2023. This program affects employers with 5 or more employees with locations in the city of Bloomington. The definition of “employee” includes any individual who performs services for an employer within the city boundaries for at least 80 hours in a year, including temporary and part-time workers but not including independent contractors or student interns.

Mize Payroll Services

We will be setting up the accruals for affected employers with locations in Bloomington in time for accruals to start July 1.

Accrual Rate

Employees accrue 1 hour of sick and safe time for every 30 hours worked within the geographic boundaries of the city up to a maximum of 48 hours in a calendar year. The initial ordinance only allowed for full hour accruals, but a proposed amendment would allow for fractional hour accruals.

Employees exempt from overtime are deemed to work 40 hours in each work week unless the exempt employee’s normal work week is less than 40 hours per week, in which case the employee will accrue ESSL based upon their normal work week.

Accruals must occur at least monthly. Employers can frontload 48 hours of ESSL following 90 days of initial employment for an employee’s first year and provide at least 80 hours of ESSL at the beginning of each subsequent calendar year.

Employees can carry over 80 hours at the end of the calendar year (employers can allow a higher cap).

Usage

Employees can begin utilizing ESSL after 90 calendar days of employment.

ESSL can be used for the employee or family member’s mental or physical illness or injury including preventive care. ESSL can also be used to cover absences due to domestic abuse, sexual assault, or stalking of the employee or family member. For a detailed list of qualifying ESSL circumstances, see the Rules, section 23.07.

Reporting

Employers must report ESSL accruals and usage on employee pay stubs (not just current ESSL balances). Employers are also required to post information about ESSL in an area where employees can easily access it (see poster link below). Employers must keep records of hours worked, ESSL accruals, and ESSL usage for at least three years in addition to the current calendar year.

Existing PTO Programs

If an employer already has a paid time off policy that meets the same accrual and carryover provisions, the employer can use their existing program to satisfy ESSL requirements.

Separation from Employment and Rehire Provisions

Employers are not required to pay out accrued and unused ESSL upon termination of employment. If an employee is rehired within 120 days of separation, all unused ESSL (if not paid out) must be reinstated.

For More Information

For detailed descriptions of coverage and circumstances under which ESSL can be taken, see the ordinance and rules.

Click here to download the Break Room Poster required to be posted in a location where employees can easily access.

Virginia

Effective July 1, 2023, Virginia employers cannot use an employee’s social security number as an employee’s identification number or on any access card or badge. Penalties have been added to existing SSN use restrictions.

West Virginia

West Virginia’s state tax withholding tables have been revised to reflect individual income tax rate changes signed into law March 7 that were retroactive to January 1, 2023. To read the governor’s news release, click here.

Wisconsin

The Wisconsin Department of Workforce Development has a new payment portal for employer unemployment insurance tax payments.

Washington

The WA Cares Long Term Care Program begins July 1, 2023. This program is fully funded through employee payroll deductions and is intended to provide long-term care coverage for individuals when they need it.

Mize Payroll Services

Premiums will be deducted starting with the first paycheck on or after July 1, 2023. For 2023, the tax rate is .58% of an employee’s gross wages. The reporting and payment of premiums is being added to the Paid Family Medical Leave upload. No action needs to be taken by the employer to register for the program, as it is based on the company’s UBI number obtained when beginning business in Washington.

Exemptions

All Washington employers are responsible for withholding premiums from worker paychecks, but employees can opt out of the program if they qualify for an exemption. There is no exemption available at the company level, and employers cannot apply for exemptions on their employees’ behalf.

Employees can qualify for exemptions if they:

Have private long-term care insurance prior to Nov. 1, 2021.
This is a permanent exemption.
Live outside Washington.
Are a spouse or registered domestic partner of an active-duty service member of the US armed forces.
Have non-immigrant work visas.
Are veterans with a 70% service-connected disability rating or higher.
This is a permanent exemption.

Workers will no longer qualify for an exemption if:

They change their permanent residence to within Washington.
Their immigration status changes and they become a permanent resident.
Their spouse is separated from miliary service or the marriage/partnership is dissolved.

Instructions for applying for an exemption, and the link to apply, can be found here: https://wacaresfund.wa.gov/apply-for-an-exemption/

Long Term Care Benefits

Employees with a care need can begin applying for benefits (up to $36,500, adjusted annually for inflation) under this program July 1, 2026. In order to be eligible to claim a benefit, employees must have contributed to the program for at least 10 years without a break of 5+ years. Alternatively, employees who contributed three out of the past six years at the time of application are eligible to apply. Individuals born before 1968 earn lifetime access of 10% of the full benefit amount for each year of contribution.

For More Information

Paycheck insert

Frequently Asked Questions (FAQs)

Fact Sheet

WA Cares Website

When it comes to Mize Payroll 2.0, Ann knows it all! Here are two tips and tricks she's put together for you.

UKG Security Updates

Have a tip or trick you'd like Ann to cover? Let her know, ahobart@mizecpas.com

Tools You Can Use

Electronic Pay Solutions

Employees like to get paid on time. Sometimes that’s harder than it might seem. With delivery issues, severe weather, and wildfires frequently in the news and maybe even your back yard, getting paychecks to employees can be difficult. That’s where electronic payroll solutions like direct deposit and pay cards can be a great solution.

Electronic pay solutions can also save you money. The costs of both printing and delivery are going up, which increases your payroll fees. With direct deposit and pay cards, employees can access their pay stubs and year-end Forms W-2 and 1095 online through the Mize payroll portal.

Read more about the benefits of electronic pay from our Insights blog by clicking here.

Earned Wage Access

Even if employees get paid on time, sometimes that money doesn’t stretch until the next payday. Stuff happens – the washing machine overflows, the car breaks down, or somebody gets sick. Sometimes employees need money sooner than later, but there aren’t a lot of great options. Payday loans, overdrawing their checking account, and incurring credit card debt can chock up high fees. The employer can give a pay advance or loan, but that can put you in a difficult position.

That’s where an Earned Wage Access (EWA) program can help. EWA programs are a new employee benefit that advances employees a certain amount or percentage of their accrued wages. The employee’s next paycheck is automatically reduced by the advanced amount, with no risk or liability to the employer.

For more information about ZayZoon, the EWA program offered through Mize CPAs, click here or visit with your Mize professional.

MizeCPAS .com