Here is the latest addition of our Unemployment Flash Report.  Please send an e-mail to taxalerts@talx.com with any comments or suggestions.

Employer Tax Services

In a vote of 95-0, the Senate today passed legislation that expands and extends the veteran category of the Work Opportunity Tax Credit (WOTC). As reported earlier, the credit amounts will range from $2,400 to $9,600 per eligible hired veteran. This extension takes effect on the day the President enacts it and runs through December 31, 2012. This legislation will be voted on by the House of Representatives next week – it is expected to pass expeditiously.

Ezrie Yellin

This week, Senate Democrats introduced an amendment to the bill that required governments at all levels to withhold 3 percent of payments to companies contracted to do work on their behalf. This amendment includes what is being called the “Vow to Hire Heroes”. This amendment, put forth by Senate majority leader Harry Reid, includes a “Returning Heroes and Wounded Warriors Work Opportunity Tax Credits” using the same language form the President’s earlier American Jobs Act. While the bill does not extend the core WOTC program, it does extend and expand upon the current WOTC veteran category, increasing its value and extending it to a new expiration of Dec 31, 2012.

The amendment details the following changes to the WOTC veteran’s category:

1. For a veteran who is entitled to compensation for a service connected disability and who has a hiring date which is not more than 1 year after having been discharged or released from active duty, the amount of the wages subject to credit is $12,000 (potentially a $4,800 credit);
2. For a veteran who has an aggregate period of unemployment during the 1 year period ending on the hiring date which equal or exceed six months, the amount of wages subject to the credit is $14,000 (potentially a $5,600 credit);
3. For a veteran entitled to compensation for a service connected disability and who has aggregate periods of unemployment during the one year period which equal or exceeds six months, the amount of wages subject to the credit is $24,000 (potentially a $9,600 credit);
4. For a veteran who has aggregate periods of unemployment during the 1 year period ending on the hiring date which equal or exceed 4 weeks, the amount of wages subject to the credit is $6,000 (a credit of $2400).

Further, the amendment includes a "simplified certification system" which requires the state work force agency (SWA) to certify that the veteran received unemployment compensation for the statutory periods of unemployment that are listed for each category. Note that the language used specifically mentions the SWA’s, an integral part of the national WOTC infrastructure, as the certifying agency.

Needing 60 votes to pass the senate, this bill is expected to voted on by the senate today at 1:45 EST.

Ezrie Yellin

Two new tough requirements for employers in California and Pennsylvania covered in the latest Labor and Employment Compliance Bulletin:

California’s Wage Theft Prevention Act of 2011 takes effect Jan. 1, 2012, creating detailed requirements for employers to notify new employees about pay rates, among other things.

Starting Jan. 1, 2012, employers must require their employees to fill out a “Certificate of Residence” form and retain the signed form as you would retain a W-4.

But there’s good news as well: California’s Governor returned Senate Bill 931 to the Legislature without his signature, citing the bill’s "numerous and costly new requirements on pay card providers."

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HR 3346 and S1804 also known as the Emergency Unemployment Compensation Act were introduced by Democrats in both the House and Senate on November 3, 2011.  This legislation would prevent over 6 million Americans from losing their unemployment benefits next year by continuing the current Federal unemployment insurance programs through 2012.  The bills would also relieve States with Federal unemployment loans from interest charges next year, prevent higher Federal unemployment taxes in January 2012 on employers in insolvent States, and provide a solvency bonus to States without any outstanding loans.  We will be tracking this legislation and provide updates as they become available.

Here is the latest addition of our Unemployment Flash Report.  Please send an e-mail to taxalerts@talx.com with any comments or suggestions.

Employer Tax Services

California is not imposing a $25 per employee surcharge on employers.  A recent LA Times article mistakenly gave that impression.  It actually is referring to the increase in FUTA tax that will be due with the fourth quarter FUTA deposit on January 31, 2012.   That amount will be 0.3% of the first $7,000 in taxable wages or $21 per employee.  Following is a link to the article in question. http://www.latimes.com/business/la-fi-california-unemployment-fund-20111025,0,7242467.story

Employer Tax Services

As of November 1, 2011, the North Carolina Employment Security Commission (ESC) was eliminated.  The agency is now called the Division of Employment Security (DES), which falls under the jurisdiction of the Department of Commerce.

The DES is in the process of changing forms and such to reflect the new name and affiliation.  At this time, current claims and tax management services that TALX provides to its clients will continue as normal.  The DES will keep us apprised if this changes.

The ESC website has been updated to reflect the DES.  You may check it out at: 

https://www.ncesc.com/default.aspx 

The struggling economy has continued to place the Unemployment Insurance (“UI”) system under enormous pressure, and the current economic recovery is proceeding very slowly.  This leaves state UI trust funds in a very weakened condition, especially if a new downturn is in the future as some predict.

Economic data continues to indicate that employers should anticipate higher federal and state UI taxes in financial forecasts.

Please see this link http://www.talx.com/News/TaxIntelligence/TI_OCT2011_ETS.pdf for additional information.

The TALX I-9 Compliance Bulletin for October discussed a pair of federal bills would create a nationwide requirement for all employers to use E-Verify. The bills appear to have little chance of passing but demonstrate the rising tide of interest in imposing E-Verify requirements. Neither bill would offer relief from the patchwork of state bills with E-Verify requirements: Both expressly permit states to use their authority over business licensees to create penalties for failure to use the new E-Verify system.

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