The Temporary Payroll Tax Cut Continuation Act of 2011 temporarily extends the two percentage point payroll tax cut for employees, continuing the reduction of their Social Security tax withholding rate from 6.2 percent to 4.2 percent of wages paid through Feb. 29, 2012. This reduced Social Security withholding will have no effect on employees’ future Social Security benefits. ..

Effective January 1, 2012, Arizona's minimum wage will be increasing $.30 per hour making the new minimum wage $7.65. There is no change in the federal tip credit of $3.00 making the allowable minimum wage for tipped employees $4.65.  ..

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Valued Arizona Clients: ..

The Federal Unemployment Tax (FUTA) rate was reduced to 6.0% effective July 1, 2011. This makes all employers who are subject to Arizona Unemployment Insurance (UI) Tax also subject to the 0.10% Arizona Job Training Tax (JTT) on taxable wages they pay after June 30, 2011. (“Taxable wages” are the first $7,000 of gross wages paid to each employee in a calendar year.)                               

The JTT funds the Arizona Job Training Program administered by the Arizona Commerce Authority. It is payable to the Arizona Department of Economic Security with employers' quarterly UI Tax and assessed on the same taxable wage base, i.e., the first $7,000 of gross wages paid to each employee each calendar year.

Therefore, ALL tax-rated employers, regardless of their UI Tax rate and whether they are “new employers” or experience-rated, are subject to JTT on taxable wages they pay after June 30, 2011. (Employers who were exempt from JTT in the first and second quarters of 2011 continue to be exempt from JTT on taxable wages they paid in those quarters. In other words, for 2011: (1) if such an employer did not meet the $7,000 taxable wage base of an employee in the first or second quarter, the employer is subject to JTT only on taxable wages paid to that employee in the third and fourth quarter; (2) if the employer did meet the taxable wage base of an employee in the first or second quarter, the employer is not subject to JTT on wages paid to that employee in the third or fourth quarter.)

As a Payroll Experts' client, we have you covered!  If you have any additional questions, you may call your Payroll Expert or visit https://www.azdes.gov/main.aspx?menu=316&id=6854 for the Arizona Department of Economic Security website and more details. ..

House Bill 2619, which imposes a Special Assessment (SA) on taxable wages paid in 2011 and 2012, becomes law (Arizona Revised Statutes § 23-730.01) effective July 20, 2011, but is retroactively effective to January 1, 2011. The DES Unemployment Insurance (UI) Tax Section is responsible for collecting the SA according to the following provisions. ..

The Internal Revenue Service today announced an increase in the optional standard mileage rates for the final six months of 2011. Taxpayers may use the optional standard rates to calculate the deductible costs of operating an automobile for business and other purposes. ..

Employers are currently required to pay a flat rate of 6.2% on the first $7,000.00 of each employee’s annual wages for FUTA. Employers receive a credit of 5.4% for paying state unemployment on time, reducing the 6.2% to .8% resulting in an maximum annual FUTA payment of $56.00 for each employee with annual earnings of at least $7,000.00 ($7,000.00 × .8% = $56.00). ..

If the federal government shuts down, IRS operations will be severely limited. However, the underlying tax law remains in effect, and all taxpayers should continue to meet their tax obligations as normal. ..