On Aug. 8 the Internal Revenue Service issued proposed regulations containing some clarification on the Tax Cuts and Jobs Act (TCJA) passed last December. One of the areas of anticipated clarification was whether W-2 wages paid from third party payers, such as professional employer organizations (PEOs) or agents under section 3504, were included in the wages of the third party payer or the taxpayer for purposes of calculating the qualified business deduction for pass-through entities.
Employers in California and the US Virgin Islands are the only jurisdictions subject to credit reduction for the 2016 tax year due to failure to pay off federal UI loans by Nov. 10, 2016. Employers in these jurisdictions face a 2016 federal unemployment tax that is 1.8 percent higher than employers not in credit reduction states.
The IRS released temporary and proposed regulations for a the new voluntary certification program for PEOs. The application process is targeted to open on July 1. Under the IRS program, PEOs that apply will be required to meet certain requirements to gain certification. Click here to read the full article from Accounting Today.
Recently in Washington D.C., Jeff Solis PEO Practice Leader at UHY LLP, and other industry leaders met with representatives from the IRS and the US Treasury to address details included in the Small Business Efficiency Act (SBEA).
The Protecting Americans from Tax Hikes Act of 2015 (PATH) was signed by President Obama on Dec. 18, 2015. Included in the many tax breaks and incentives that were "extended" by this bill was the reinstatement of the Work Opportunity Tax Credit (WOTC). The WOTC is a credit to employers who hire certain targeted groups of employees and is based on a percentage of the wages paid to those employees. The PATH Act even added a new category that will be available in 2016.