Recent State And Federal Payroll Tax Reporting Changes For 2022
Jul 26, 2022
W-2 eFile Threshold For 2022
The IRS proposed regulations amending the rules for filing electronically which reduced the threshold for filing W-2s last year as part of the Taxpayer First Act. The Act proposed wide-sweeping changes to modernize the IRS and improve the efficiency of the taxpayer experience when filing taxes and processing returns much easier for the IRS.
As part of the Taxpayer First Act, many businesses will no longer be able to submit paper forms. For the tax year 2021, the electronic eFiling threshold was reduced from 250 employees to 100 employees. For 2022 any employer with 10 or more employees must file W-2s electronically. For now, this mandate only applies to W-2s.
When these proposed changes are fully implemented, it will require businesses to count all information returns they are filing to establish whether they must eFile returns. Simply put, businesses must total all 1099s, W-2s, ACA, and any other informational reports they are required to file to determine if they exceed the eFile threshold.
IRS Issues Revised Form 941 and Schedules, Form 941-X
A revised version of Form 941 and its instructions were released, in addition to instructions for Schedule B, R, and 941X.The forms and instructions were updated to reflect the expiration of COVID-19-related relief.
The updated Form 941 and its instructions have a revision date of June 2022 and can be used for the second, third, and fourth quarters of 2022. The instructions now include only two worksheets.
Worksheet 3 (COBRA Premium Assistance Credit) is no longer included. The IRS also updated Form 941-X to match changes made to Form 941.
- Form 941: https://www.irs.gov/pub/irs-pdf/f941.pdf
- Form 941 Instructions: https://www.irs.gov/pub/irs-pdf/i941.pdf
- Schedule B: https://www.irs.gov/pub/irs-pdf/f941sb.pdf
- Schedule B Instructions: https://www.irs.gov/pub/irs-pdf/i941sb.pdf
- Schedule R: https://www.irs.gov/pub/irs-pdf/f941sr.pdf
- Schedule R Instructions: https://www.irs.gov/pub/irs-pdf/i941sr.pdf
Idaho Revises Withholding Tables, Reduces Supplemental Wage Tax Rate
Effective for wages paid on or after January 1, 2022, the Idaho State Tax Commission (STC) has released revised wage bracket and percentage method withholding tables.
Employers should begin using the revised withholding tables as soon as possible and going forward.
Also, effective retroactive to January 1, 2022, the supplemental wage tax rate was reduced to 6% from 6.5%. Earlier this year, legislation was enacted that reduced personal income tax rates and condensed tax brackets retroactive to January 1, 2022.
California Supreme Court Rules Premium Pay for Missed Meal; Rest Breaks Are Wages
On May 23, 2022, in Naranjo v. Spectrum Security Services, Inc, the California Supreme Court clarified that a violation of Labor Code section 226.7 gives rise to claims under Labor Code section 203 (waiting time penalties) and 226 (inaccurate wage statements).
Plaintiff Naranjo brought a putative class action seeking premium pay (an additional hour of pay) for alleged meal break violations, as well as damages and penalties for failure to report the premium pay on employees' wage statements and failure to timely provide the premium pay to employees upon termination of their employment.
The Supreme Court held that missed-break premium pay should be subject to the Labor Code's timing requirements for paying wages at the end of employment under Labor Code section 203. The Court explained that an employee is entitled to the additional hour of pay immediately upon being forced to miss a rest or meal period.
What Does This Mean For Employers?
Because missed-break premium pay is considered "wages," it must be reported on all wage statements during employment and on the final earnings statement provided within the applicable, final pay deadlines. Failure to pay missed-break premium pay will now subject employers to additional claims for inaccurate wage statements and waiting time penalties, resulting in significant liability, especially in class or representative actions.
In light of this decision, employers would be wise to redouble their efforts to ensure meal and rest break policies are in place and that all practices related to meal and rest breaks, including wage statements and waiting time penalties, are legally compliant. Don't hesitate to contact your local SW attorney to ensure compliance with break policies.