requirements

Paycheck/Payroll Frequencies by State

Published January 30, 2012 | By Nancy Smyth

Minimum payroll frequencies are determined by each state and can be quite confusing. I’m often asked “How often do I have to pay my employees” during a Certified Payroll Training Webinar. State minimum paycheck frequencies are shown below – this information comes directly from the U.S. Department of Labor’s website.

It’s difficult to thoroughly cover the requirements of all 50 states in a 2 hour webinar, but it has crossed my mind that a series of blog posts on the differences between what State Laws are for how often payroll must be generated and how that can effect the generation of a certified payroll report would be a good thing to do. While I could have simply started this series and talked about the complexities of generating certified payroll reports when issuing employee payroll on anything other than a weekly basis – I first wanted to display the requirements by state, rather than just put off a link to the U.S. Department of Labor website.

Under the Federal Davis-Bacon and related Acts; contractors and subcontractors performing work on Federal or Federally-aided construction-type contracts are required to submit weekly payrolls. The Copeland Act provides further/clearer requirements; indicating that contractors and subcontractors performing work on Federally financed or assisted construction contracts “furnish weekly a statement with respect to the wages paid to each employee during the preceding week”.

Obviously, contractors and subcontractors who issue their payroll on a weekly basis find the necessary information easier to obtain; therefore, making compliance simpler to obtain.

State	Weekly	Bi-Weekly	Semi-Monthly	Monthly
Alaska			X	X
Arizona			X ³
Arkansas			X
California	X ⁹	X ⁹	X
Colorado				X
Connecticut	X ⁴
Delaware				X
District of Columbia			X
Georgia			X
Hawaii			X	X ⁵
Idaho				X
Illinois			X	X ²
Indiana		X
Iowa	X	X ⁶	X	X
Kansas				X
Kentucky			X
Louisiana		X	X ⁷
Maine			X ⁸
Maryland		X
Massachusetts	X	X
Michigan ⁹	X	X		X
Minnesota				X ¹⁰
Mississippi		X ¹¹	X ¹¹
Missouri			X
Montana ¹²
Nebraska ¹³
Nevada			X	X ²
New Hampshire	X
New Jersey			X
New Mexico			X	X ²
New York	X ¹⁴		X ¹⁴
North Carolina ¹⁵
North Dakota				X
Ohio			X
Oklahoma			X
Oregon				X
Pennsylvania ¹³
Rhode Island	X ¹⁶
South Dakota				X
Tennessee			X
Texas			X	X ¹⁷
Utah			X ¹⁸
Vermont	X	X ¹⁹	X ¹⁹
Virginia		X ²⁰	X ²⁰	X ²
Washington				X
West Virginia		X
Wisconsin				X
Wyoming			X

Alabama and South Carolina – No regulations or not specified.
Illinois, Nevada, New Mexico and Virginia – Monthly payday requirements for Executive, Administrative, and Professional personnel.
Arizona – Payday two or more days in a month, not more than 16 days apart.
Connecticut – Longer interval (up to monthly) permitted if approved by Labor Commissioner.
Hawaii – Employees may choose to be paid on a monthly basis under special election procedure. Director of Labor and Industrial Relations also may grant exceptions to the general semi-monthly payday requirement. Payday requirement applies only to private sector employment.
Iowa – Any predictable and reliable pay schedule is permitted as long as employees get paid at least monthly and no later than 12 days {excluding Sundays and legal holidays} from the end of the period when the wages were earned. This can be waived by written agreement; employees on commission have different requirements.
Louisiana – Applicable to entities engaged in manufacturing, mining, or boring for oil, employing 10 or more employees, and to every public service corporation. Payment is required once every two weeks or twice during each calendar month.
Maine – Payment due at regular intervals not to exceed 16 days.
California and Michigan – Frequency of payday depends on the occupation.
Minnesota – Employees engaged in transitory employment, i.e. migrant workers, which require and employee to change the employee’s pace of abode, because the employment is terminated wither by the completion of the work or by the discharge or quitting of the employee must be paid within 24 hours.
Mississippi – Applicable to every entity engaged in manufacturing of any kind in the State, employing 50 or more employees and employing public labor, and to every public service corporation doing business in the State. Payment is required once every two weeks or twice during each calendar month.
Montana – Wages must be paid within 10 business days after the wages are due and payable.
Nebraska and Pennsylvania – Payday designated by employer.
New York – Weekly payday for manual workers. Semi-monthly payday upon approval for manual workers and for clerical and other workers.
North Carolina – None specified, pay periods may be daily, weekly, bi-weekly, semi-monthly or monthly.
Rhode Island – Childcare providers shall have the option to be paid every two weeks.
Texas – Monthly payday for employees exempt from overtime provisions of the Fair Labor Standards Act.
Utah – Payments are to be paid at regular intervals but in periods no longer than semi-monthly.
Vermont – Employers may implement bi-weekly and semi-monthly payday with written notice
Virginia – Employees whose weekly wages total more than 150% of the average weekly wage of the Commonwealth may be paid monthly, upon agreement of each affected employee.

NOTE: South Carolina – Employers with 5 or more employees are required to give written notice at the time of hiring to all employees advising them of their wages agreed upon, and the time and place of payment along with their expected hours of work. The employer must pay on the normal time and at the place of payment established by the employer.

Stay tuned over the next week to find out some of the problems that can occur when a company follows various state payroll requirements {bi-weekly, semi-monthly, and monthly paychecks} and how the pay frequencies affect the submission of their certified payroll reports.

1 Comment

Payroll Tip – Health Insurance Tracking Requirements for 2012

Published December 14, 2011 | By Nancy Smyth

Payroll is a complex part of every bookkeeper’s job, new requirements for 2012 include showing company paid health insurance premiums on employees W-2′s; making things even more complex. See this question asked by a reader of our blog.

I have a question that I’ve been searching for an answer to, I’ve even asked our Tax Accountant about it. In 2012 it is mandatory that we show the company share of employee health insurance on W-2′s, do you know if there is there a way in QuickBooks to track this on a regular basis, so that it shows on the employees paystubs and then have it flow through onto the W-2 at the end of the year? Thanks, Kathleen S.

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Answer:

Hi Kathleen,

Yes, you can set QuickBooks up to track employer paid health insurance contributions, have those contribution amounts appear on employee pay stubs and then have the full yearly contribution appear on the employee’s W-2. I’ve been doing this for a long time – thankfully the QuickBooks payroll module is pretty flexible, the hardest part is the setup – and then the maintenance.

As of this date {12/14/2011} Intuit has not yet released an update to their Enhanced Payroll subscription to include W-2′s for wages paid in 2011; rumor has it that the update will be available by the 10th of January. We will be updating not only this post but the video as well as new information becomes available.

Important things to take into consideration prior to setting up QuickBooks to track this information – OR the planning stages:

Health insurance premiums for all employees are usually paid on a monthly basis in one lump sum made up of a specific amount for each employee based on the type of plan or coverage each employee has. The chances are that you pay your employees more often than that – so you want to set up a method of tracking company contributions for health insurance based on how often you pay your employees – so that the contribution is done automatically for you when you run your payroll rather than having to “remember” to do something once a month.
Will the company pay 100% of the cost of health insurance or will the employee also pay a portion through a payroll deduction?
How many pay periods your company actually has during the year.
When does your company health insurance policy renew?
Will you also be using/taking credit for company paid health insurance against the full fringe benefit amount that must be paid when employees work on prevailing wage jobs?

We’ve put together a video demonstrating the required QuickBooks setup and a free Excel Spreadsheet for tracking the costs of 100% company paid health insurance.

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Information from the IRS regarding Employer Paid Health Insurance Reporting:

Employer-Provided Health Coverage — Not Taxable; Reporting is Voluntary for All Employers for 2011 and Small Employers for 2012

Starting in tax year 2011, the Affordable Care Act requires employers to report the cost of coverage under an employer-sponsored group health plan. To give employers more time to update their payroll systems, Notice 2010-69, issued last fall, made this requirement optional for all employers in 2011. IRS Notice 2011-28 provided further relief for smaller employers filing fewer than 250 W-2 forms by making the reporting requirement optional for them at least for 2012 and continuing this optional treatment for smaller employers until further guidance is issued. Notice 2011-28 also includes information on how to report, what coverage to include and how to determine the cost of the coverage.

The 2011 Form W-2 is available for viewing on IRS.gov. This is the W-2 that most employees will receive in early 2012. The form includes the codes that employers may use to report the cost of coverage under an employer-sponsored group health plan. {Currently, as of 12/12/2011, you will report Health Insurance Costs in Box 12 of the W-2 using code DD}.

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.

What types of health care coverage must be included in the amount reported on the Form W-2?

A. Employers are required to report the total cost of all “applicable employer-sponsored coverage” provided to an employee. For any employee, “applicable employer-sponsored coverage” is coverage under a group health plan that the employer makes available to the employee that is non-taxable to the employee (or that would be non-taxable if the coverage were employer-provided).

Certain types of coverage are excluded from the definition of applicable employer-sponsored coverage and are not included in the amount reported. These types of coverage are:

(1) coverage for long-term care;

(2) coverage for the following HIPAA ”excepted benefits”:

coverage only for accident, or disability income insurance, or any combination of these coverages;
supplemental liability insurance;
liability insurance (including general liability insurance and automobile liability insurance);
workers’ compensation or similar insurance;
automobile medical payment insurance;
credit-only insurance; and
other similar insurance coverage specified in regulations, if the benefits for medical care are secondary or incidental to other insurance benefits.

(3) any coverage under a separate policy, certificate, or contract of insurance which provides benefits substantially all of which are for treatment of the mouth (including any organ or structure within the mouth) or for treatment of the eye; and

(4) coverage only for a specified disease or illness and hospital indemnity or other fixed indemnity insurance, if the employee pays the premiums for the coverage on an after-tax basis.

In addition, employers should not include the following amounts in calculating an employee’s total cost of coverage:

(1) the amount contributed to any Archer MSA;

(2) the amount contributed to any Health Savings Account; and

(3) the amount of any salary reduction election to a flexible spending arrangement (FSA).

For additional information on this topic, visit these links:

Affordable Care Act Tax Provisions - http://www.irs.gov/newsroom/article/0,,id=220809, 00.html
2011 Form W-2 - http://www.irs.gov/pub/irs-pdf/fw2.pdf
IR-2011-31 - http://www.irs.gov/newsroom/article/0,,id=237870,00.html
Notice 2010-69 http://www.irs.gov/pub/irs-drop/n-2010-69.pdf
Notice 2011-28 http://www.irs.gov/pub/irs-drop/n-11-28.pdf
Employer-Provided Health Coverage Information Reporting Requirements – Q & A - http://www.irs.gov/newsroom/article/0,,id=237894,00.html
IRS YouTube Video – Health Care: W-2 Health Insurance Reporting - http://www.youtube.com/watch?v= TFepqFnEj5I&feature= youtu.be
IRS Webinar - Reporting of Employer Healthcare Coverage on Form W-2 - http://www.irsvideos.gov/ReportingEmployerHealthcareCoverage/
New Info added 1/3/2012 – IRS Notice 2012-09 – http://www.irs.gov/pub/irs-drop/n-12-09.pdf – Interim Guidance on Informational Reporting to Employees of the Cost of Their Group Health Insurance Coverage

We hope that you’ve found this post informative, if so please take a moment to leave a comment or share it on your favorite social network.

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Update 12/16/2011 – Intuit Releases Payroll Update 21201

Late yesterday afternoon Intuit released Payroll Update 21201, which includes revised tax tables and several form updates. Included in this update is the option for reporting Health Insurance under Code DD on employee W-2′s.

When creating or editing an existing Company Contribution item type for Employer Paid Health Insurance, when you get to the Tax Tracking Type window, from the drop down list, select Health Coverage Cost, as shown in the screenshot below:

Right click on the image to enlarge it

We will be updating our video by the first of the year to reflect the actual selection of the correct tax tracking type.

2 Comments

QuickBooks Tip – Dealing With Special Invoicing Requirements

Published November 15, 2011 | By Nancy Smyth

Dealing with special customer invoicing requirements can be a royal pain! Sometimes it feel like each customer you deal with says “if you don’t invoice me like THIS you aren’t going to get paid”. While QuickBooks is a very flexible software program, sometimes it’s very difficult to meet the requirements of specific customers or clients. Below is a perfect example, submitted by a reader of just how difficult billing requirements can be.

I use QuickBooks Contractor version as a self-employed contractor with a hospital. The problem is I get the job on a P.O. from the hospital, say it’s for $80,000. As I do different stages of the job I bill the hospital for that stage and they send me a check. When I do the next stage the hospital wants the invoice to reflect the original P.O. and the money they have already paid. How do I do that on this software? Jean

____________________________________________________

Jean, I’m pretty certain that you can meet these requirements – it will cause some extra work on your part each time you are ready to bill the hospital for the next stage; but I don’t think it will be a lot of work.

Go ahead and create your invoice as usual – I’m making a BIG assumption here that you take the PO from the hospital and set that up as a QuickBooks Estimate and generate Progress Invoices from your Estimate {but even if you don’t that’s ok}.

Once you are viewing that Invoice in QuickBooks, click the Letters icon at the top and choose Prepare an Invoice Letter

Right click on the image to enlarge it

When the Choose a Letter Template window appears, select Invoice Letter with Details and then click the Next button

Right click on the image to enlarge it

This now sends your Invoice into Microsoft Word and by default provides information about the invoice that you can then modify to meet the invoicing requirements of the hospital.

Right click on the image to enlarge it

For example, I would change the heading called Invoice Amount $720.00 to read Original PO Amount $80,000.00, Invoice Balance $720.00 to read Previous Payments Received $XXX.XX, and add a line that reads Current Payment Due $720.00.

Right click on the image to enlarge it

NOTE: You can edit this letter template and include the changes to the wording – that way all you have to do is enter the amounts for Original PO and Previous Payments. To Edit a letter template go to the Company menu -> choose Prepare Letters with Envelopes -> Customize Letter Templates -> View or Edit Existing Letter Templates -> choose Invoice Templates -> Invoice Letter with Detail.

QuickBooks has a lot of built-in functionality – the problem is finding it! We hope you found this QuickBooks tip for dealing with special invoicing requirements to be helpful. If so please take a moment to leave a comment or share it on your favorite social network.

What’s New with New Hire Reporting? Date of Hire

Published June 27, 2011 | By Nancy Smyth

Reporting new hires has been a requirement for a long time, however, the “first day of work” law went into effect on June 8, 2011.

New Hire Reporting is one of the best tools for locating noncustodial parents who may be evading their child support responsibilities. Employers play a key role in ensuring children receive the financial support they need. The Personal Responsibility and Work Opportunity Act (PRWORA) of 1996 requires employers to report all new hires tot heir State Directory of New Hires. Moreover, the Claims Resolution Act of 2010 was recently passed to reform the Unemployment Insurance program, including changes to Section 453A (b) and (c) of the Social Security Act. This legislation added a new requirement for employers to report, in addition to other information, the date that an employee first performs services for pay. The “first day of work” law went into effect June 8, 2011. For more information on new hire reporting visit the Federal Office of Child Enforcement website at http://www.acf.hhs.gov/programs/cse/newhire/employer/private/newhire.htm

Source: SSA/IRS Reporter Newsletter, Summer 2011 Edition.

FREE Webinar on New 3% Contractor Withholding Requirements

Published June 22, 2011 | By Nancy Smyth

From the June 22, 2011 Issue of the Federal, State & Local Governments Newsletter published by the IRS.

The office of Federal, State and Local Governments will hold a free, one-hour webinar on July 14, 2011, to discuss the required 3 percent income tax withholding on certain payments made by government entities, to take effect in 2013. The webinar is recommended for any Federal, state or local government entities as well as tax professionals.

Participants can get answers to these questions:

What is Section 3402(t) ?

The Legislative history on Section 3402(t)

Who must perform Section 3402(t) withholding?

What payments are subject to Section 3402(t) withholding?

Exceptions to Section 3402(t) withholding?

Section 3402(t) deposit and reporting mechanics?

You can register for the webinar by clicking here.

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Additional information from the IRS Website, current as of 6/6/2011; be sure to check this page for updates.

On May 6, 2011, the Internal Revenue Service released final regulations on section 3402(t) of the Internal Revenue Code (IRC). This provision provides that, for payments after Dec. 31, 2012, federal, state, and other units of government with annual payments for goods and services of $100 million or more must withhold income tax of 3% of the total payment for goods and services.

IRC 3402(t) was created by the Tax Increase Prevention and Reconciliation Act of 2005, and originally required withholding for covered payments after Dec. 31, 2010. The implementation was delayed one year by a later statute. The final regulations delay it one additional year, to payments made after Dec. 31, 2012.

Government Entities Required To Withhold Under IRC 3402(t)

The following are subject to the new requirement:

The entire U.S. government, including all federal agencies, the executive branch, the legislative branch and the judicial branch.
All states including the District of Columbia (but not including Indian tribal governments).
All political subdivisions of a state government or every instrumentality of such subdivisions unless the instrumentality makes annual payments for property or services of less than $100 million.

Exception for Small Entities

Subdivisions of a state, or instrumentalities of a subdivision of a state, are exempt from the withholding requirement if its total annual payments for property and services (not including wages) are less than $100 million. The proposed regulations provide a simple rule for determining whether an entity makes annual payments less than $100 million. In general the entity looks to its accounting year ending with or within the second preceding calendar year For example, if total payments for the entity’s 2011 accounting year exceed $100 million, the withholding requirement will apply in 2013.

Under an optional rule, an entity may average payments made during any four of the previous five accounting years ending with the accounting year ending with or within the second preceding calendar year.

Payments Subject to Section 3402(t) Withholding

Generally, withholding is required on all payments to all persons providing property or services to the government, including individuals, trusts, estates, partnerships, associations, and corporations. Withholding is required at the time of payment. If the government entity fails to withhold the tax required under section 3402(t), it becomes liable for the payment of the tax.

Payment Threshold

The proposed regulations create a payment threshold of $10,000 and provide that payments below the threshold are not subject to withholding. The regulations also include an anti-abuse rule that payments of $10,000 or more may not be divided into payments of less than $10,000 solely for the purpose of avoiding the withholding requirements.

Exceptions

The regulations provide the following exceptions from the withholding requirements:

Payments otherwise subject to withholding, such as wages.
Payments for retirement benefits, unemployment compensation, or social security.
Payments subject to backup withholding, if the required backup withholding is actually performed.
Payments for real property, including land or completed buildings.
Payment of interest.
Payments to other government entities, foreign governments, tax exempt organizations, or Indian tribes.
Payments made under confidential or classified contracts, as described in IRC 6050M(e)(3).
Payments made by a political subdivision of a state, or instrumentalities of a political subdivision of a state that make annual payments for property of services of less than $100 million.
Public assistance payments made on the basis of need or income. However, assistance programs based solely on age, such as Medicare, are subject to the requirements.
Payments made under a government grant principally for a public purpose.
Payments to employees in connection with service, such as retirement plan contributions, fringe benefits, and expense reimbursements under an accountable plan.
Payments received by certain nonresident aliens and foreign corporations.
Payments in emergency or disaster situations.
Certain payment card transactions reportable under section 6050W.

Update – New Law Repeals 3% Contractor Withholding:

On Nov. 21, 2011, the 3% Withholding Repeal and Job Creation Act of 2011 was signed into law, repealing section 3402(t) of the Internal Revenue Code (IRC). This legislation eliminates the withholding and reporting requirements established under IRC section 3402(t) and the accompanying regulations.

IRC section 3402(t) would have required all Federal and state government entities, and some local government entities, to withhold 3% on certain payments to contractors, beginning on Jan. 1, 2013. The regulations under section 3402(t) also required the government entity to report the amount of the payment and the amount withheld on Form 1099-MISC.

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