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1 W-2 Information Payroll Notice Martin Luther King Day Correction Archive CDs Final Note: W-2 requests and contacting paysmart Phone Volume 2, Issue 1 W-2 Information W-2s for 2009 must be postmarked 2/1/2010 to employees. PaySmart will have W-2s delivered to employers by 1/26. Please provide PaySmart with any additional information as soon as possible. W-2 s received by employers will be stuffed and sealed by PaySmart for your convenience. If you wish to stuff and seal the W-2 s on your own please notify PaySmart by 1/7. Employer copies of W-2 s will be available on your portal. Important Reminders Payroll Notices January 1, 2010 Another important reminder: please forward all payroll notices to PaySmart as they are received. In particular it is very important that you report PAUC rate notices when you get them. It is imperative to your payroll that you report all notices to Paysmart as soon as possible. Martin Luther King Day January 18, 2010 is a bank holiday. The PaySmart office will still be open however, the banks will be closed affecting direct deposit processing. Please submit all direct deposits for the pay date of Tuesday January 19 by 3:00 PM Thursday January 14, 2010 the pay date of Wednesday January 20 by 3:00 PM Friday January 15, 2010 Please inform PaySmart of any alternate check dates for Monday January 18, Correction We have a correction to mailing Preparing For 2010 payroll. The federal mileage rate is.50 not.55 which was previously reported. We apologize for the inconvenience. Archive CDs Just a friendly reminder that 2009 archive CDs are available, the CD includes 2009 year to date earnings for all employees, quarterly federal and state reports as well as employer W-2 copies. CDs will be issued at the end of February, and can be purchased for $75. If you are interested in purchasing the CD send an to payroll@paysmartpa.com. Final Note Requests for duplicate W -2s must come from employers, a fee of $5.00 is applied for duplicates. PaySmart will only discuss payroll issues with authorized payroll contacts. Please inform employees they are not to contact us directly regarding their W-2s. Instead refer them to your payroll contact and we will gladly help with any issues.

2 Portal Reports Presidents Day Tax Withholding FUTA & SUTA Rate Changes Duplicate W-2 s Phone Volume 2, Issue 2 Portal Reports Quarterly reports & year end forms can be found on the portal. These forms and reports on your portal are for your reference only. If you are a tax impound client PaySmart will process all forms and reports on your behalf. This is just a simple reminder these forms are for your information only. If you are not a tax impound client quarterly forms were couriered to your office with instructions for filing. PaySmart Important Reminders & Holidays files all W-2s with the appropriate agencies for all clients. Presidents Day February 1, 2010 February 15, 2010 is Presidents day and is a bank holiday. The PaySmart office will still be open however, the banks will be closed affecting direct deposit processing. Please submit all direct deposits for the pay date of Tuesday February 16 by 3:00 PM Thursday February 11, Direct deposits for the pay date of Wednesday Feb- ruary 17 must be submitted by 3:00 PM Friday February 12, Please inform PaySmart of any alternate check dates for Monday February 15, We hope you have a safe & happy holiday weekend. Federal & SUI Tax Withholding Due to the expiration of the stimulus package, the American Recovery and Reinvestment Act, the federal tax withholding tables have changed. This means net paychecks will be less by approximately $10 per week. In addition the PA SUI tax rate has changed from.06% to.08%. This increase has also caused a change to net check amounts. Final Notes FUTA & SUTA Rate Changes FUTA (Federal Unemployment Tax Act) and SUTA (State Unemployment Tax Act) has reset the limits as is done every January. Tax impound clients may have noticed an increase to impound amounts from December 2009 to January This increase is due to a change in the FUTA & SUTA limits. Duplicate W-2s Requests for duplicate W-2s must come from employers, a fee of $5.00 is applied for reprints to the client. PaySmart will only discuss payroll issues with authorized payroll contacts. Employee copy W-2s can be found on your portal. If you do not have a portal please contact your PaySmart representative to set one up.

3 No Bank Holidays Winter Wonderland Paysmart Charities Work Place Posters Daylight Savings Phone Volume 2, Issue 3 No Bank Holidays Just a friendly reminder for all PaySmart clients that there are no bank holidays during the month of March. Winter Wonderland PaySmart would like to thank all of our clients for their support during the snow storm on February 10, Your understanding and support March 1, 2010 Updates and Notices that we closed early and payroll deliveries were delayed will not be forgotten. It was a tough storm for everyone, and we thank you very much for your patience. PaySmart Charities PaySmart is beginning the planning for the annual charity event. The last two years we have given to local families through Make A Wish. Final Notes Mandatory Work Place Posters Every day employers receive mailings regarding work place posters. Many ask themselves what these posters are for and do they really need them? The answer is yes. Employers are required to post certain notices at their worksite so employees have access to information about applicable labor laws. All notices must be posted in an area that can been seen and read by all employees. Both federal and state governments require specific posters for certain employers. A list of free downloadable PA posters for your industry can be found at: open=514&objid=553565&mode=2. From this link you can also obtain the link to the federally required work place posters. As part of this process the company would like to reach out to our clients. If anyone in the PaySmart community knows of a special person who could benefit from our fundraiser; we ask that you contact a PaySmart representative. Paysmart wishes to give back to the community which has given so much to us. Don t forget Daylight Savings Sunday-March 14th at 2:00 AM

4 Holidays Pa Local Tax Reform HIRE act 1205 Manor Drive #201 Phone Please forward this newsletter to anyone in your organization that may benefit from its content. To be added to the list, with subscribe in the re: line or unsubscribe in the re: line. Volume 2, Issue 4 Good Friday Closing: On Friday, April 2, 2010 PaySmart will be closed for Good Friday. Banks will remain open, but we will be closed; therefore, all direct deposits must be submitted by 1:00 PM Thursday, April 1 for the pay date of Tuesday, April 6. Thank you. We wish you a safe and happy holiday weekend. Pennsylvania Local Tax Reform PA is in the process of simplifying its local tax April 1, 2010 Holidays & Pa Local Tax Reform collection and reporting structure. When the final stages of Act 32 are implemented there will be one tax agent per county. In order to work towards this consolidation, local agents are implementing changes to reporting requirements. Starting January 1, 2010 employers are required to remit detailed information on employees including name, social security number, address, gross wages, local tax withheld and local services tax withheld. Many local agents are HIRE Act encouraging tax payers to file electronically. If you are a tax impound client you do not need to be concerned with these new filing requirements, PaySmart has been working closely with several local tax agents in our area to keep abreast of the changing requirements. If you are not tax impound, PaySmart will continue to provide you with all of the necessary information to meet filing requirements. If you are interested in becoming an impound client please contact us at (717) Federal Social Security Tax Forgiveness By now you have already heard about the HIRE Act signed by President Obama on March 18, This new act offers incentives for employers to hire unemployed individuals without creating more unemployed individuals by allowing employers forgiveness of the 6.2% social security tax on certain newly hired employees. The following are the provisions of the law for new hires: 1. The employee must have been hired between 2/3/10 and 12/31/10 2. The employee must have been unemployed for at least 60 days prior to hire or worked less than 40 hours in the last 60 days for someone else. 3. The employee is hired for a new position or replaces a position that was either voluntarily vacated or released for cause. The employer must have a signed statement from the new employee stating they meet qualification 1 & 2. After a year of employment the employer may qualify for an additional $1000 tax credit. Please consult your tax advisor for additional information. Although this act was enacted 3/18/10 the credit from 1 st quarter will not be applied until 2nd quarter taxes. All regular taxes will be paid and reported on the first quarter form 941. Please make PaySmart aware of any new hires that qualify for this program so we may properly calculate your employer taxes. If you are unsure if you qualify please contact PaySmart

5 HIRE Act W-11 Form Memorial Day Patient Protection and Affordable Care Act Phone Please forward this newsletter to anyone in your organization that may benefit from its content. To be added to the list, com with subscribe in the re: line or unsubscribe in the re: line. Volume 2, Issue 5 Upcoming Holidays and Important Reminders HIRE Act On March 18th 2010 the federal Hiring Incentives to Restore Employment Act (Hire Act) was signed by the President. There have been many questions regarding which employees qualify under this Act. Besides the basic rules such as hire dates, previous employment and the position filled; a qualified employee could have been previously employed by you. This means if you are a seasonal employer you may also benefit from the payroll tax holiday this summer season by rehiring your previously unemployed summer help. Additionally no family members, relatives or dependants of an employer can qualify. These relationships include: children or their descendants, siblings or step-siblings, parents or grandparents, step-parents, nephews, nieces, uncles, aunt and in-laws. The law fails to mention an unemployed spouse that meets all other qualifications. Please feel free to contact PaySmart if you are unsure of the qualification or check out the website for our questionnaire. W-11 Form The IRS has released the W- 11 form to be used as a confirmation that an employee is qualified under the HIRE Act. The W-11 certifies that an employee has not been hired or worked more than 40 hours in the past 60 days. You can find this form on our website under payroll forms. You may also use your own certifications however the W-11 form is quick, easy and guaranteed to meet the IRS requirements for certification. Memorial Day Just a reminder: Paysmart will be closed Monday May 31st 2010 for the Memorial Day Holiday. Please submit all direct deposits for the pay date of June 1st 2010 by 3:00 pm Thursday pm May 27th 2010 and direct deposits for the pay date of June 2nd 2010 by 3:00 pm Friday May 28th Please contact Paysmart with any alternate check dates for May 31st We hope you have a safe holiday. The Patient Protection and Affordable Care Act On March 23rd this bill was approved by the president as a way to encourage small employers to offer health insurance to for the first time or to maintain current coverage. This credit is available generally to employers that have fewer than 25 full-time equivalent employees, and pay wages that average less than $50,000 per employee per year. May1, 2010 The tax credit is aimed to help small business that employ low to moderate wage employees and is available to employers who pay at least half the cost of single coverage for their employees. The maximum credit is 35 percent of premiums paid in 2010 by eligible small business and 25 percent of premiums paid by taxexempt organizations. Eligible small business are able to claim the credit as part of the general business credit starting with the 2010 tax return in 2011.

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7 July 4th APA Congress Update NPR Tip Reporting Phone Volume 2, Issue 6 Upcoming Holidays and APA Congress Update July 4th Holiday Paysmart will be closed Friday July 2, 2010 for the Independence Day Holiday. The banks will be closed Monday July 5. Please submit all direct deposits for the pay date of July 7th and July 8th by 3:00 pm Thursday July 1, Please contact Paysmart with any alternate check dates for July 5, We hope you have a safe & happy holiday. June 1, 2010 APA Annual Congress Last week I had the opportunity to attend the annual American Payroll Associations Congress in National Harbor, MD. The Congress is an opportunity for payroll professionals to attend classes and hear speakers regarding the latest and ever changing rules of payroll. At this year s Congress I attended many interesting classes but there were two issues that concerned me for the well being of PaySmart clients. I have outlined the issues below, if you have any questions or concerns regarding these topics or any of the other crazy IRS changes that have occurred in the last several months please feel free to contact me directly at (717) or at kelli@paysmartpa.com. Sincerely, Kelli Gift, CPA Save the date!! September 2, 4:oo PaySmart Offices Make a Wish Fundraiser Please forward this newsletter to anyone in your organization that may benefit from its content. To be added to the list, payroll@paysmartpa.com with subscribe in the re: line or unsubscribe in the re: line. National Research Program (NRP) The IRS intends to perform 2,000 payroll audits in 2010 and an additional 4,000 in The main objective is to obtain data regarding trends in the following major categories: worker classification, fringe benefits, information reporting and executive compensation. During review of worker classification the auditors will be focused on exempt and non exempt employees. For more information on how your employees are classified visit the Department of Labor, Wage and Hour Division at Some areas of concern in fringe benefits are the reporting and taxation of benefits such as company cars, medical insurance and life insurance. NRP & Tip Reporting When considering whether a person is an employee or a subcontractor you may want to review form SS-8. This form asks the questions the IRS will ask when making the same determination also known as the 20 Factor Test. The IRS is taking steps to ensure compliance with employment and income tax requirements relating to executive compensation. They are reviewing both highly compensated executives as well as under compensated executives. Along with the issues discussed above the IRS will be looking at your company s business documents. These documents include minutes to the annual meeting if a corporation, loan agreements with officers/ owners and employment contracts. It is best to have these documents up to date prior to being notified of an audit. If you have any concerns regarding any of these topics please contact PaySmart so we can point you in the right direction. TIP Reporting Another area the IRS intends to focus is on tip reporting in the service industry. The IRS expects 100% tip reporting. Adjusting tips to meet the minimum wage requirement will not be enough to satisfy the IRS s appetite. They are looking for complete compliance not only from the food service industry but any other service industry which is customarily tipped such as hair stylists. If you would like to arrange an onsite education of your staff regarding tip reporting we will be happy to lead the charge.

8 Labor Day Cobra & New Hire Credits Make-A-Wish Phone Please forward this newsletter to anyone in your organization that may benefit from its content. To be added to the list, with subscribe in the re: line or unsubscribe in the re: line. Volume 2, Issue 7 Upcoming Holidays and Cobra & New Hire Credits Labor Day The next holiday is September 6, PaySmart and the banks will be closed September 6 th in observation of Labor Day. For direct deposit dates of September 7 & 8 please remit payroll information by September 2 & 3 respectively. Also, please keep in mind that bank holidays also effect the processing deadlines for tax impound. Should any changes be required we must be notified prior to 12:00pm September 3. Just a reminder all PaySmart holiday information can be found at in the 2010 Beginning of Year Guide and are also highlighted on the 2010 PaySmart monitor calendars. Cobra & New Hire Credits PaySmart wants to make sure you are receiving the credits you deserve. When hiring a new employee be sure to indi- Make-A-Wish Foundation Fundraiser Once again PaySmart is asking our clients to help us become Wish Makers. In 2008 we were able to become Wish Makers for Athena and her family. In 2009 we were delighted to meet and send Brode and his family on their Make-A-Wish trip. This year in 2010 we are striving to make the wishes of, the want to be princess, Molly come true. Molly is yet another of many local children in need of a Wish Maker as they face the challenges of extreme illnesses. PaySmart has been privileged to get to know these extraordinary children and their families. We hope that you can help keep these families spirits high and give them something to wish for. This year we will once again ask for donations to Make-A-Wish Foundation. No donation is too small. For a donation of $50 you will receive a raffle ticket for one of many prizes including free payroll services, free accounting fees, a night in a Senators Baseball box, and gift certificates to local restaurants. To celebrate our success and our appreciation for your participation we will be having a celebration party on September 2 from 4:00 to 7:00 in the PaySmart, Gift & Associates & IFS office suits. Please join us in making Molly s wish come true. July & August 2010 cate to us if they qualify for the New Hire Credit. You can find the required W-11 affidavit and qualifications at our website under forms. If you are paying COBRA premiums for a terminated employee we will need to know the amount paid per quarter. The federal reimbursement of 65% is issued via the form 941 prepared quarterly by PaySmart.