Upcoming State Payroll Tax Changes

Many states will soon be revising key payroll tax figures and procedures. Here are some of the highlights:

Arizona

Effective July 20, 2011, employers may pay employees by either direct deposit or paycard, rather than by paper check, if certain requirements are met.

Arkansas

A 0.2% advance interest tax will be added to all employers' unemployment tax rates (except reimbursing employers), beginning with the second quarter return filed in July. The tax will help Arkansas pay the interest due on its federal unemployment insurance loans.

Colorado

The Colorado Department of Labor and Employment will be sending a bill to employers called “Unemployment Insurance Notice of Trust Fund Assessment” in early July to help the State pay the interest due on its outstanding federal unemployment insurance loans.

Florida

The Florida minimum wage rate recently increased from $7.25 to $7.31 per hour.

Hawaii

Effective July 1, 2011, professional employer organizations (PEOs) must register with the Hawaii Department of Labor and Industrial Relations before entering into a PEO agreement with a client company in Hawaii.

Idaho

Effective July 1, 2011, a PEO that fails to submit a separate quarterly wage report for each of its clients will be subject to a $100 penalty for each client that it fails to separately report. The maximum penalty in any quarter may not exceed $5,000.

Illinois

Effective for the tax year beginning on July 1, 2011, any employee making less than $4,300 per calendar quarter should not be included in the taxable employee counts for purposes of the $4 monthly Chicago employer's expense tax. Effective July 1, 2011, employers are required to make payments for the tax on or before the 15th day following the end of the quarterly tax period. Previously, the payments were due on or before the last day of the month following the end of the quarterly tax period [Chicago Department of Revenue Tax Alert, 11/17/10].

Michigan

The unclaimed property report must be filed by July 1, 2011, for the period beginning July 1, 2010, and ending on March 31, 2011.

Mississippi

Beginning July 1, 2011, all private employers must use the federal E-Verify system to verify the employment eligibility of new hires.

Missouri

Employers will pay an additional assessment with their second quarter unemployment tax return to help Missouri pay the interest due on its federal unemployment insurance loans.

Nebraska

Effective July 1, 2011, employers who made over $16,000 in withholding tax payments in a previous tax year must make all withholding tax payments by EFT.

Ohio

Effective July 1, 2011, the Ada Village (Hardin County) tax rate will increase from 1.15% to 1.65%; the Tipp City (Miami County) tax rate will increase from 1.25% to 1.5%; and the Franklin City (Warren County) tax rate will increase from 1.5% to 2.0%.

Utah

Utah's Taxpayer Access Point (TAP) is replacing WebExpress as a means to file, pay, and manage withholding taxes. Employers must register in the TAP system on or after June 27 to prevent filing and payment delays [STC Announcement, Taxpayer Access Point (TAP) is Replacing WebExpress, 5/5/11].

Virginia

Effective July 1, 2011, semi-weekly filers are required to file all withholding tax returns and make payments electronically [L. 2010, H1500 (c. 890)].

West Virginia

Beginning July 1, 2011, a 1% occupation tax must be withheld from all persons working in the City of Huntington. The occupation tax replaces the city service fee of $3.00 per week.