If you are using the Look-Back method for sick pay hourly rate calculations and entered a new Wage Code for the Safe Harbor payments, you should double-check the setting for “Include in Regular Rate of Pay Calculations” on the Wage Type setup.
If the box is checked the software will include Safe Harbor wages into the look-back rate calculation, thus increasing the average hourly rate for any employees that request sick pay within 90 days of receiving a Safe Harbor payment.
The “Include in Regular Rate of Pay Calculation” setting should be unchecked:
If you’re not sure what method you are using for sick pay calculations, there’s no harm in changing the setting any way.
Update 12/6/2016: The DIR has released additional details on the following page: Instructions for Payments to the Unpaid Wage Fund. We are reviewing the Form 40 that the DIR is requesting employers to use and will publish an update when the program has been modified to generate a file in this layout. We will post more information when this update is ready to download.
The latest update available via the Check for Updates option includes a new report to use when forwarding Safe Harbor funds to the state for employees that you are unable to locate. The Returned Check Report will list all of the employees, their addresses, social security number, and net payment amounts (after taxes are deducted) for each employee that you were unable to locate.
When handling safe harbor payments that are returned to you as undeliverable, there are several specific things that you should do and several things you should not do.
Do:
When a check is returned, you should make further attempts to locate the employee, including using “people locator” services as per the law.
If you are unable to locate the employee, check the Check Returned box on the Safe Harbor Employee window. Do not check this box before you are sure that you cannot locate the employee. This checkbox determines whether or not the employee and the payment amount will appear on the Returned Check Report.
If you check this box and later the employee does receive the check (for instance, the employee shows up in person to collect the Safe Harbor payment), then you should make sure the Check Returned box is unchecked.
Do not:
Void the check using the Void Payroll Check option. Safe Harbor payments are wages that must be reported on the quarterly report and W-2, even if the employee has not received them. If you are unable to locate an employee, they are treated the same as uncollected wages (except there is a specific procedure for forwarding uncollected Safe Harbor wages to the state).
Before issuing the check to the state:
Determine if any safe harbor checks are outstanding (have not cleared on a bank statement) and have not been returned to you. If you have any checks that have not been returned and have not cleared your bank account, you may need to leave these checks off of the returned checks report and handle them as regular uncollected wages if they end up being returned after the Dec 15th deadline.
(You may want to verify with the state whether or not they will accept undeliverable Safe Harbor payments that are returned to you after the Dec 15th deadline. Our current understanding is that the state will not accept Safe Harbor payments that you are unable to deliver after Dec 15th.)
How to issue the check to the state:
Review the instructions on the DIR’s FAQ for handling Safe Harbor payments. (See the second to the last question.)
Run the Returned Checks Report. This will list all of the employees that have the Check Returned box checked and provide a total for you to issue a check to the DIR.
Use the Returned Checks Report to generate an electronic copy. The DIR has not specified what electronic formats are acceptable. The program can generate a PDF, XLS or CSV file. (The DIR has also not specified what media you should use to submit the electronic copy.) Enter a filename for the type of electronic copy that you want to generate.
Post a journal entry to debit your cash in bank account for the amount of the returned checks. Offset this with a credit to a liability account or to the suspense account.
Issue a direct expense check payable to “INDUSTRIAL RELATIONS UNPAID WAGE FUND” posted to the liability or suspense account for the total amount of checks that were returned/undeliverable.
Determine the amount of the administrative fee. Issue a second direct expense check for this amount.
Send all of this (checks, printed and electronic copies of reports) to the DIR according to the directions provided on the FAQ.
The IRS has released Notice 2016-70, which extends the due dates for furnishing 1095-C’s to employees. Use the link to see the entire Notice, but we have copied below the verbiage pertaining to this extension:
“Following consultation with stakeholders, the Department of the Treasury (Treasury) and the Service have determined that a substantial number of employers, insurers, and other providers of minimum essential coverage need additional time beyond the January 31, 2017, due date to gather and analyze the information and prepare the 2016 Forms 1095-B and 1095-C to be furnished to individuals. Accordingly, this notice extends by 30 days the due date for furnishing the 2016 Form 1095-B and the 2016 Form 1095-C, from January 31, 2017, to March 2, 2017. In view of this automatic extension, the provisions under Treas. Reg. §§ 1.6055-1(g)(4)(i)(B)(1) and 301.6056-1(g)(1)(ii)(A) allowing the Service to grant extensions of time of up to 30 days to furnish Forms 1095-B and 1095-C will not apply to the extended due date. Notwithstanding the extensions provided in this notice, employers and other coverage providers are encouraged to furnish 2016 statements as soon as they are able. Treasury and the Service have determined that there is no similar need for additional time for employers, insurers, and other providers of minimum essential coverage to file with the Service the 2016 Forms 1094-B, 1095-B, 1094-C, and 1095-C. Therefore, this notice does not extend the due date for filing with the Service the 2016 Forms 1094-B, 1095-B, 1094-C, or 1095-C, which remains February 28, 2017, if not filing electronically, or March 31, 2017, if filing electronically. However, this notice does not affect the provisions regarding automatic extensions of time for filing information returns, which remain available under the normal rules by submitting a Form 8809. See Treas. Reg. § 1.6081-1; Temp. Treas. Reg. § 1.6081-8T. It also does not affect the provisions regarding additional extensions of time to file. Id. Employers or other coverage providers that do not comply with the due dates for furnishing Forms 1095-B and 1095-C (as extended under the rules described above) or for filing Forms 1094-B, 1095-B, 1094-C, or 1095-C are subject to penalties under section 6722 or 6721 for failure to timely furnish and file, respectively. However, employers and other coverage providers that do not meet the relevant due dates should still furnish and file. The Service will take such furnishing and filing into consideration when determining whether to abate penalties for reasonable cause. The extension of the due date provided by this notice applies only to section 6055 and 6056 information statements for calendar year 2016 furnished in 2017 and does not require the submission of any request or other documentation to the Service. Because the 30-day extension of the due date to furnish granted in this notice applies automatically and is as generous as the permissive 30-day extensions of time to furnish 2016 information statements under sections 6055 and 6056 that have already been requested by some reporting entities in submissions to the Service, the Service will not formally respond to such requests. Because of the extension granted under this notice, some individual taxpayers may not receive a Form 1095-B or Form 1095-C by the time they are ready to file their 2016 tax return. Taxpayers may rely on other information received from their employer or other coverage provider for purposes of filing their returns, including determining eligibility for the premium tax credit under section 36B and confirming that they had minimum essential coverage for purposes of sections 36B and 5000A. Taxpayers do not need to wait to receive Forms 1095-B and 1095-C before filing their returns. Individuals need not send the information relied upon to the Service when filing their returns but should keep it with their tax records.”
The most common error employers received in the 1095-C acknowledgement file was the TIN validation error. (TIN stands for Taxpayer Identification Number.) This error indicates the the IRS could not match the social security number and name information provided in the electronic 1095-C record to the Social Security Administration’s database.
There are several reasons for a TIN Validation can occur. It could be a problem where the data was not entered correctly either in your payroll system or in the Social Security Administration’s system. A typo or transposed letters when entering the employee’s name could trigger the error. The electronic 1095-C file splits up the employee name into separate first, middle, last and suffix fields. It could be that you have the correct employee name, but the middle name was entered in the last name field. It could be that you are missing the middle name (perhaps the employee didn’t include it on their I-9 f0rm).
Fresno, Calif.- As previously reported here at Datatech, the United States Customs and Immigration Services or USCIS has released the new Form I-9 on their website. The update is designed to make it easier for employee eligibility verification on a computer.
By January 22, 2017, employers must use only the new version, dated 11/14/2016. Until then, they can continue to use the version dated 03/08/2013 or the new version.
Among the changes in the new version, Section 1 asks for “other last names used” rather than “other names used,” and streamlines certification for certain foreign nationals.
Harvesting time
Other changes include:
The addition of prompts to ensure information is entered correctly.
The ability to enter multiple preparers and translators.
A dedicated area for including additional information rather than having to add it in the margins.
A supplemental page for the preparer/translator.
The instructions have been separated from the form, in line with other USCIS forms, and include specific instructions for completing each field.
The revised Form I-9 is also easier to complete on a computer. Enhancements include drop-down lists and calendars for filling in dates, on-screen instructions for each field, easy access to the full instructions, and an option to clear the form and start over. When the employer prints the completed form, a quick response (QR) code is automatically generated, which can be read by most QR readers.
Datatech Training Manager, Hannah Tarrats says, “While the new I-9 is a fill in form, this is in the instructions:
‘Employers and employees may choose to complete any or all sections of the form on paper or using a computer, or a
combination of both. Forms I-9 obtained from the USCIS website are not considered electronic Forms I-9 under DHS
regulations and, therefore, cannot be electronically signed. Therefore, regardless of the method you used to enter information
into each field, you must print a hard copy of the form, then sign and date the hard copy by hand where required.’
You’ll note that there are links at the top of the online form to go to the instructions, to start over or print the document. So, a way you can use the online form is to have a computer set up where employees type their information in, then print and sign.”
Form I-9 requirements were established in November 1986 when Congress passed the Immigration Reform and Control Act (IRCA). IRCA prohibits employers from hiring people, including U.S. citizens, for employment in the United States without verifying their identity and employment authorization on Form I-9.
For those of you who have an IRS e-Services account, you will want to make sure that you keep your online password updated. The IRS recently informed one of our customers that if the password is not changed every 6 months, the site will require you to repeat the registration process in order to use your TCC to submit electronic files.
Since you don’t want to be caught in this scenario when the clock is ticking, it may be wise to log in and change your password now in anticipation of the 1095-C reporting in early 2017. You may also want to create a recurring calendar reminder so that you can continue to change the password every 5 months or so. This will ensure that you always have access to your e-Services account whenever you need to submit files or corrections. Thank you to former-employee-turned-client Brittany Hart for bringing this issue to our attention.
If you are using Simpluris as your third party administrator to make Safe Harbor payments, you will need to export two Excel files. The first file will include the employee information (name/address/SSN/payment amount) and the second file will include the pay period data for Simpluris to use for the required statement that must accompany the payment.
Follow the workflow and instructions in our prior blog post here. When you get to the point where you are exporting the statement data, use the “Standard AB 1513 Statement Export” definition. When exporting this file, be sure to use a “.xlsx” extension on the filename. (This is a newer file format that supports more rows than the older “.xls” format.)
When you export the Safe Harbor Employee information, use the “Simpluris Export” definition. Column P in the employee file will contain the payment amount. To verify that the correct total payment amount has been exported to the file, open the file in Excel and add a sum formula on Column P and verify that this matches your Create Checks report. (Be sure not to save the spreadsheet with the sum formula included!)
Both of these export definition files are included with the latest program update. If you do not see the definition files when you try to import the definitions, download the latest update using the Tools->Check for Updates option.
If Simpluris has not already sent you the instructions for setting up an account on their secure file upload service, request the instructions, create and account, then upload these files after you have verified the payment totals contain in them are correct.
The Datatech GrapeVine 