Steele Martin Jones & Company Payroll Newsletter

Steele Martin Jones & Company

Certified Public Accountants and Business Advisors

Payroll Newsletter

Fall 2012


Lower TN Unemployment Rates Coming!  The “trust fund” that holds the TN Unemployment tax you’ve paid in has grown such that they can cut the rates a little.  We had been in the highest rates of the six tables.  You should be seeing a letter with your new rates soon.

TN Lawful Employment Act.  Tennessee employers must begin to either use E-verify or an alternate method of verifying that a person is eligible for employment.  For private employers with 6 to 199 employees, this is effective 1/1/13.

The “alternative method” is somewhat close to filling out Form I-9, which is already required by U.S. Homeland Security.  Our firm has never seen the I-9 form enforced, but the new TN law would be enforced by TN Labor & Workforce Development (which we do see for regular audits).  You would have to make copies (for your file) of their driver’s license or alternate ID.

Decrease in Employee Withholding of Social Security.  Employee withheld rates for Social Security Tax decreased from 6.2% to 4.2% for 2011 and 2012.  The employer rate remained at 6.2%.  Congress is debating whether to continue this rate reduction into 2013.

Reporting of Health Insurance on 2012 Form W-2.  The amount of insurance the employer paid may be disclosed on the 2012 Form W-2.  This is for information only…just as we now disclose retirement plan contributions.  Employers who file fewer than 250 W-2s in the prior year are currently exempt. The Steele Martin payroll staff will be working with you this fall to develop a system to gather the needed information.

Obamacare Updates

  • For 2010 to 2013, a Health Insurance Credit was available for certain small businesses that pay health insurance for their employees.  The company must have fewer than 25 full-time equivalent workers, and average pay must be under $50,000.  Even firms under that level are subject to a phase-out.  Insurance for owners is excluded from the credit. We found that few of our clients qualified.
  • Mandated Health Insurance Coverage begins in 2014, but employers with fewer than 50 full-time equivalent employees are exempt.  The penalty for not offering insurance is up to $2,000 per employee, but the penalty is likely less than the insurance cost.
  • Individuals must have health insurance coverage beginning in 2014, or face a fine (or a tax as the Supreme Court ruled).  It will be interesting to whether employees gravitate to companies that offer the minimum insurance.
  • In the past, the business owner had ways of paying for his/her health insurance (only) through the business.  New non-discrimination rules say you have to cover “everyone” with comparable coverage, or nobody. There is a grandfather clause, but likely your carrier has changed the policy enough that you don’t qualify.

General Planning Comment:  Because of the probability that tax rates are going up next year on the “rich,” we should consider moving income UP into 2012 or delaying expenses until 2013.


Disclaimer:  We produce this newsletter for our clients and others who are concerned about planning and managing their tax affairs.  Each business and individual’s tax situation is unique, and the material in this newsletter is not intended to constitute specific accounting, tax, investment, or legal advice.  This newsletter is a general overview of each topic and is not intended to be a substitute for specific advice, as the impact of items mentioned will not be the same for every taxpayer.  Accordingly, where specific advice is necessary or appropriate, consultation with a competent professional advisor is highly recommended.