EMPLOYERS ARE REQUIRED TO USE NEW
FEDERAL PAYROLL TAX WITHHOLDING TABLES AND
MAY BE SUBJECT TO NEW COBRA RULES
Two provisions have arisen out of the American Recovery and Reimbursement Act of 2009 that will have a major effect on the way your company handles payroll and benefits. Both provisions are in effect now or will soon take effect.
Making Work Pay Credit - This credit is immediately available to your employees for 2009 and 2010, through lower federal payroll tax withholding. As an employer, you are required to use new federal payroll withholding tables by April 1, 2009. Please click on the link for our Employer Handout which provides greater detail.
COBRA Premium Assistance - The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) is a law requiring employers to temporarily continue health insurance coverage to their ex-employees. If your company is subject to COBRA, you may be obligated to contact ex-employees who have been involuntarily terminated as far back as September 2008 to offer them health insurance coverage under COBRA. Even if these ex-employees have been offered COBRA and declined, you may still be required to reoffer the health insurance under the new tax law provisions. Under the new provisions, the ex-employee is required to pay only 35% for up to nine months, until December 31, 2009, and the employer is required to pay the remaining 65% of the coverage. The employer is allowed to take the 65% COBRA subsidy payments as a credit on their payroll taxes and is reported on Form 941 (Employers Quarterly Federal Tax Return). Please click on the link below for our Employer Handout which provides greater detail.
Employer Handout - Summary of New Tax Act - Payroll
Please contact Hal Margolit, Tax Manager, at 215-675-8364 or hmargolit@wm-cpa.com with questions or if you require assistance implementing this process.
