FEDERAL PAYROLL CHANGES FROM JANUARY 1, 2011
IR-2010-92, Aug. 19, 2010
WASHINGTON — Consistent with a Financial Management Service initiative announced in April of this year, the IRS today issued regulations to significantly increase the number of electronic transactions between taxpayers and the federal government.
The regulations (REG 153340-09) would eliminate the rules for making federal tax deposits by paper coupon because the paper coupon system will no longer be maintained by the Treasury Department after Dec. 31, 2010. The proposed regulations generally maintain existing rules for depositing federal taxes through the Electronic Federal Tax Payment System (EFTPS).
Using EFTPS to make federal tax deposits provides substantial benefits to both taxpayers and the government. EFTPS users can make tax payments 24 hours a day, seven days a week from home or the office.
Deposits can be made online with a computer or by telephone. EFTPS also significantly reduces payment-related errors that could result in a penalty. The system helps taxpayers schedule dates to make payments even when they are out of town or on vacation when a payment is due. EFTPS business users can schedule payments up to 120 days in advance of the desired payment date.
Information on EFTPS, including how to enroll, can be found at www.eftps.gov or by calling EFTPS Customer Service at 1-800-555-4477.
Some businesses paying a minimal amount of tax may make their payments with the related tax return, instead of using EFTPS. More details regarding taxes required to be deposited using EFTPS, dollar thresholds and other specific requirements are in the proposed regulations.
Additional Information:
CALIFORNIA PAYROLL CHANGES
Starting with the first quarter of 2011, employers will begin filing new:
· Quarterly Contribution Return and Report of Wages (DE 9)
· Quarterly Contribution Return and Report of Wages (Continuation) (DE 9C).
For more information about 2011 payroll tax changes, please review the 2011 Payroll Tax Reporting Changes FAQs.
NOTE: The draft versions of the new forms are for informational purposes only. Final versions will be available to all employers in December 2010. Print specifications are available on EDD’s Payroll Taxes — Forms and Publications page. Registered employers will receive the new forms automatically by mail starting in 2011.
The change to quarterly reporting will allow EDD and employers to identify overpayments more quickly, which will result in faster refunds. In addition, EDD will be able to promptly notify employers of any amounts due.
This chart describes the major forms changes:
|
Type |
Old Reporting Method |
New Reporting Method |
|
Report contributions and withholdings: · Unemployment Insurance (UI) · Employment Training Tax (ETT) · State Disability Insurance (SDI) · Personal Income Tax (PIT) |
Reconcile annually on the Annual Reconciliation Statement (DE 7) |
Reconcile quarterly on the Quarterly Contribution Return and Report of Wages (DE 9) |
|
Report detailed wage items for each employee |
Report on the Quarterly Wage and Withholding Report (DE 6). |
Report on the Quarterly Contribution Return and Report of Wages (Continuation) (DE 9C) |
Employers will still use the DE 6 and DE 7 for years prior to 2011.
Employers will continue to make deposits using the Payroll Tax Deposit (DE 88ALL) form. The quarterly reporting change will not affect deposit and return due dates. Please refer to the California Employer’s Guide (DE 44) for deposit and reporting requirements.
NOTE: This quarterly reporting change does not affect Annual Household employers, Disability Insurance Voluntary Plan filers, or Disability Insurance Elective Coverage filers.
Beginning in the spring of 2011, EDD will significantly expand its e-Services for Business. Employers will be able to conduct more business online with EDD including:
· Viewing account information
· Filing reports
· Paying tax deposits and liabilities