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Employee Retention Credits

Employee Retention Credit: A Tax Break for Employers

The Employee Retention Credit (ERC) was rolled out after the passing of the Coronavirus Aid, Relief, and Economic Security (CARES) Act on March 27, 2020. It was a way for the government to encourage businesses to retain their employees on the payroll following the negative impact of the COVID-19 pandemic. The relief was extended from March 2020 to January 31, 2021. Eligible employers can claim certain payroll taxes against wages paid to their employees in the respective periods.

On December 27, 2020, the Consolidated Appropriations (CAA) Act 2021 was enforced under the CARES Act 2020, modifying the contents of the ERC. The new changes enabled employers to continue claiming the tax credits for another six months, running up to June 30, 2021. The program was again extended and will run-up to December 31, 2021, under the American Rescue Plan Act 2021. 

One of the key employee retention benefits is offering an incentive for employers to still pay wages. In 2021, over 30,000 businesses have already claimed more than $1 billion. However, more businesses still need to be educated, given that the program is guided by some laws and regulations which keep being updated, generating several complexities.

What is the Employee Retention Credit?

It is a fully refundable tax credit which an eligible employer can claim a percentage against qualified wages paid to employees. For 2020, employers can claim 50% of all qualified wages up to $10,000 per employee paid between March 13, 2020, and December 31, 2020. So, you can claim up to $5,000 per employee. This also extends to those who initially borrowed the Paycheck Protection Program (PPP) loans.

In 2021, the American Rescue Plan Act increased the claim amount to 70% of all qualified wages paid to each employee from January 1, 2021, to December 31, 2021. The maximum limit per employee is retained up to $10,000 ($7,000 for each employee per quarter) for any quarter.

What are the Qualifications for Claiming the Tax Credit?

The American Rescue Plan Act approves the credit for any employer, college, university, hospital, and tax-exempt organization as defined under 501(c). It also extends to those who borrowed a loan under PPP.

The Internal Revenue Service issues two requirements that make an employer eligible:

  1. Any business or organization that has experienced a partial or full suspension in their operations due to government orders during COVID-19.
  2. A business that has reported a significant decline in gross receipts.

Not all businesses qualify for the first requirement, including those supplying critical goods and the ones that could resume operations through teleworking. Under the requirement for gross receipts, many businesses qualify.

From March 2020, an employer can make a claim provided the gross receipts in a calendar quarter are less than 50% of gross receipts compared to the same calendar quarter in 2019. However, if the business reports an increase in gross receipts of more than 80% of gross receipts in the next quarter for the same calendar quarter of 2019, it no longer qualifies.

For 2021, employers should prove that their operations were limited due to government closures or quarantines, leading to more than a 20% reduction of gross receipts in the quarter compared to the same calendar quarter in 2019.

What are Qualified Wages for Claiming Credit?

These are wages inclusive of those subject to FICA taxes plus specific health expenses. You need to have paid them between March 13, 2020, and December 31, 2021. In addition, the IRS qualifies health expenses to include both the before-tax deductions from both the employer and employee.

The basis for calculating qualified wages is the number of full-time employees you have hired. IRS defines a full-time employee as one who has worked an estimated 30 hours per week or 130 hours of service each month. The number of full-time employees was updated from 100 in 2020 to 500 in 2021 under the CAA.

So, for 2020, if you had hired more than 100 full-time employees in 2019, you can claim a credit against qualified wages paid for services not provided due to government closure or decline of gross receipts. And, if you had 100 or fewer employees in 2019, you can claim on all wages paid to employees, including those hours not worked due to suspension or gross receipt decline.

In 2021, having more than 500 full-time employees 2019 allows you to include only wages paid to employees for non-working hours because of forced closure or reduction in revenue. If you had employed 500 or fewer full-time employees in 2019, you could calculate credit against wages paid to all employees during the COVID-19 period. Generally, the IRS offers detailed guidelines on the components of ERC intending to help employers get informed and organize how to claim the tax credit to reap the benefits.
 
Essentially, small businesses can retain their employees even if they are not working, although larger businesses are exempted. If you are an eligible employer, this is a form of tax benefit which reduces your tax obligations. You can also request advance payments from the IRS if the payroll taxes cannot cover the credit amount. 

Just note that the advances are limited to employers with 500 or fewer employees. Furthermore, you can still claim it regardless of borrowing a PPP loan but not at the same time. Employees are also able to sustain their living as they get to keep their jobs.

Taking Action

This is still a challenging time for any business, whether big or small, and the credit program acts as a great relief against the pandemic. It is an opportunity that the government wants you to optimize as it offers a significant tax break to run your business and meet your set goals. As technology solution experts, let us help you manage through the technicalities of eligibility and wage rules. Please contact us, so we can offer you the support you need.

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What Are Point of Hire Tax Credits?

Tax credits are dispensed when a business does something valuable within the community. Giving to charity and providing child care, for example, earn tax credits. So too, can hiring. This is called the Point-of-Hire (POH) tax credit. Is your business claiming your full savings?

A business’ role as an employer is among its most important functions to the nation. Certainly, manufacturing shoes or selling groceries is important, but employing the populace is essential to the flow of industry. Each person on your team is one more person who is employed vs. unemployed. One more person receiving a reliable income and contributing their skills to the greater economy. Each time your company hires a new employee, you benefit the economy through that employment.

Employment is the path out of many situations of economic disadvantage and dependency. This is especially true in vulnerable and struggling population groups. From elevating youth into a career to employing veterans and the disabled, both federal and state governments offer business tax credits based on the opportunities offered to target-group employees. Accessing these credits requires each company to choose a Point of Hire tax credit solution to screen, verify, apply, and claim the credit each year.

What is the Point of Hire Tax Credit?

The Point of Hire tax credit is a type of tax credit given to businesses for hiring employees in disadvantaged situations. Targeted groups include veterans, SNAP and SSI recipients, and youth from Empowerment Zones, among others who benefit acutely from access to employment and career opportunities. POH tax credits are usually offered at the state level. Point of Hire tax credit is based on and paired with the WOTC (Work Opportunity Tax Credit) provided by the federal government.

The POH tax credit is available to all businesses, rewarding opportunities provided during standard hiring procedures. The credit was designed to promote diverse hiring and encourage businesses to hire from disadvantaged populations who have the most to gain from employment opportunities.

How to Get Your Company’s POH Tax Credits

The first step of claiming your POH tax credits is pre-screening for qualification. Your business must qualify, and credits only apply to new hires within specific target groups. It’s important to carefully screen your POH applications to ensure that each claim is qualified for the tax credit and how much. You must file your pre-screening application within 28 days.

POH and WOTC Target Groups

Which newly hired employees qualify your company for Point of Hire tax credits? The target groups are usually identified by their access to financial services due to poverty-line existence. This may be from a medical condition, legal status, or disadvantageous financial circumstances. The POH and WOTC programs are designed to promote these disadvantaged groups by providing a tax credit to companies that help employ these groups and improve their prospects through career advancement.

  • IV-A & TANF Recipients
    • Temporary assistance for needy families
  • Qualified Veterans
  • Ex-Felons
  • Vocational Rehabilitation Referrals
    • A person with physical or mental disabilities is referred to the employer while in a rehabilitative service plan.
  • Summer Youth Employees
    • 16-18-year-old youths from Empowerment Zones, enterprise communities, and renewal communities
    • Employed between May 1 and Sept 15
  • SSI Recipients
  • Long Term Family Assistance Recipient
  • Qualified Long-Term Unemployment Recipient
    • Unemployed for longer than 27 weeks

POH vs. WOTC: What’s the Difference?

  • WOTC:
    • Work Opportunity Tax Credit is a Federal Program
  • POH: 
    • Point of Hire tax credits are a type of tax credit offered by federal and state governments.

One of the biggest questions in Point of Hire programs is the relation to WOTC. When you look up either acronym, the other appears. They seem to be synonymous. Is Point of Hire the same as Work Opportunity Tax Credits? The answer is yes, and no.

WOTC is a point-of-hire program provided by the federal government to all eligible companies who employ certain financially at-risk groups. It is also an inspiring policy that many states took up individually. State programs that piggyback this and offer additional incentives are usually referred to simply as Point of Hire instead of using the federal Work Opportunity designator.

WOTC is the federal policy inspiration for most POH state programs. However, linguistically Point of Hire is the category, and WOTC is a point of hire style tax credit.

What is Required for POH Tax Credits

To claim your Point of Hire tax credit, you’ll first need a certificate of eligibility. To get this, you send a Form 8850 pre-screening application. If you get a certificate back, you can claim the credit with a Form 5884 or 3800. The most time-consuming part of the process is pre-screening to ensure that your circumstances qualify by the POH tax credit. The IRS also recommends that qualified tax-exempt employers not change their calculations in the assumption that the credit will be approved.

Pre-Screen to Determine Your POH Eligibility

The first and very important step is to confirm that your recent hire meets eligibility requirements. A close investigation may be necessary to determine all related factors and qualifiers. This includes very data-sensitive details about each new hire’s financial and personal status, information that must be respected and closely guarded while you have it, and may not be legal to discuss during job interviews for reasons outlined by the EEOC.

Fill and Submit Form 8850 to Request an Eligibility Certificate

Once you have determined internally that a hire is POH eligible, complete and file Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit within 28 days of the first day of work, you will need to identify and outline each of the qualifying factors to expect a certificate of POH tax credit approval.

Claim the POH Tax Credit with Form 588-C

After receiving a certificate,  file a tax-exemption claim against the employer’s Social Security tax with a Form 5884-C or possibly a 3800 based on your circumstances.

Quentelle’s Point of Hire Tax Credit Solutions

Is your business missing out on potential POH tax credit exemptions? Capable employees are often included in target groups in the process of overcoming any disadvantages without mentioning the process to coworkers. However, certain fact-checking can provide you with greater resources to benefit more new hires and better career development programs for tax purposes.

The Quentelle team is here to help you through every step of the POH tax exemption process. Our POH tax exemption solutions include pre-screening, form submission, certificate acquisition precise tax exemption claim filing. To schedule a demo or a consultation with our business tax credit experts, contact Quentelle today.

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10 Things to Consider When Putting Together Your HR Policies, Procedures & Practices

A company’s Human Resource policies define the inner workings of the business. After all, HR is the interface between the corporation and the people. Your Human Resource policies shape employee experience by defining the regulations that they work within. If HR establishes a dress code, that dress code essentially creates the clothing experience for every employee on the clock, which can entail employees’ comfort levels along with your business’s level of professionalism and formality. When HR defines vacation and leave policies, this shapes when and how employees can take time off. However, it’s not all vacations and uniforms. Human Resources runs far deeper into payroll, regulations, and equal opportunity treatment inside the workplace.

Each complete set of HR policies must include all required regulations, meet acceptable labor standards, and help the workflow run like a well-oiled machine. Even a few minor mistakes can result in lost team members and even legal trouble in the future, so it’s vital that everything is carefully considered as you construct these important central documents. So what should you keep in mind when building your HR policies, procedures, and practices? Let’s dive into the top ten considerations for a new HR stack.

 

1) Catalog Your Regulation Requirements

Mandatory HR policies are defined by regulations and labor laws. The first step in putting together HR policies is to know what is required by law or industry regulations to be included. This includes all legally mandated HR policies and the proper ways to handle any situation the policies may relate to. Document every mandatory policy and every regulation that influences your policies so that all the required work is laid out at the start. Use this as your launching point and a reference to ensure your final documents are fully compliant with legal and industry codes.

 

2) Reflect and Guide Daily Work Experiences

HR policies often miss the mark when it comes to directly helping employees. HR policies should be built to reflect and guide the real-world daily workflow of your teams. A policy may require all tools to be returned to individual cases, but the workflow involves a pegboard where tools are usually hung. Be certain that any HR policies you write can be applied in the actual workflows of company teams. Either refrain from unnecessary detail where you’re unsure about the workflow or be prepared for more flexible policies as workflows naturally adapt and change.

 

3) Correctly Handle Injuries and Incidents

What happens when an employee sustains an injury or is involved in an incident with a coworker? These are two situations where your HR policies are absolutely vital, and many fall short. Prepare your HR policies to swiftly and correctly deal with injury reports, leave, and worker’s compensation claims without creating trouble among working teams. Put in place fair fact-checking and out-of-sight reprimands where necessary. Likewise, have a fast and quiet reporting system ready for coworker conflicts and prepare your policies to safely resolve issues or quickly separate coworkers who can’t resolve their issues.

 

4) Every Policy Must Make a Balanced Impact

When it comes to fair labor and equal opportunity, HR plays a central role. Ensure that each of the policies you write, and the way you write them, impacts the entire workforce evenly. More importantly, make sure no policy unevenly impacts one or more demographics on the team. For example, now outdated dress codes once unfairly targeted women for dress restrictions and appearance expectations. Some policies might unfairly impact parents or religions that worship on Saturday. Be very careful so that your policies are even-handed for every lifestyle, gender, culture, and creed.

 

5) Include Policies for Remote and Hybrid Teams

It’s a bright new world in the post-pandemic industry, and one of the most significant changes is remote work. Companies across the globe have accepted hybrid and remote teams when off-site work was once thought impossible. Whether you are writing policies for a new company or overhauling your old HR policies, be sure to include details for your remote workers and hybrid teams.

Remote work policies will vary because teams are not in the office, don’t see their superior in person, and never have to refill the break room coffee pot. Hybrid teams will need careful management because they blend in-office policies with regular remote work flexibility.

 

6) Alternate or Neutralize Pronouns

Should your handbook default to “He,” “She,” or “They” when it comes to passive pronouns? You will need examples and the occasional pronoun to articulate your policies. The answer is either alternation or neutrality (or both). Alternating pronouns switches between he/him/ and she/her for pronouns. Many textbooks over the decades have used this trick to keep the subject matter both engaging and overall gender-neutral.

If you prefer, however, you can also rely on the safe, neutral pronoun of they/them at any time, and sometimes this is the best approach for fully neutral policy statements. Alternation is best when giving examples.

 

7) Prioritize Timeless Statements – Use Terms That Won’t Become Outdated

An employee handbook can become outdated with surprising speed. Write your HR policies to be as ‘timeless’ as possible. Refer to titles instead of names. Keep dates and ‘this year/last year’ references out of your copy. Avoid policies that might be quickly outdated or go into too much detail on things that can easily change in the near future. The last thing you want is for your handbook to be a snapshot into working life in 2022 and need re-writing by 2023.

 

8) Prepared for Diverse Handicap Accommodation

HR is responsible for assisting disabled employees in finding accommodation. Sometimes this means ordering the special chair or authorizing the purchase of specialized software. However, not all HR teams (and their policies) have a great track record with willing, helpful, and successful accommodation. So aim for the opposite. Strive to write your HR policies to be the most beneficial and prepared to help employees with any handicap accommodations they require.

Remember, when writing your policy, that handicaps come in all forms; from poor eyesight to motor control issues or problems with physical stamina. Another instance could be an auditory processing handicap. Employees might need software, tools, chairs, ramps, or just access to a quiet room. Your policies should never focus just on physical handicaps or those most easily understood. Accommodation comes in many forms, and flexible accessibility is key.

 

9) HR Policies Concerning Cybersecurity

Don’t forget cybersecurity in your HR policy documentation. Today, security measures are something that every employee needs to take, even entry-level associates. Work with your IT team to determine the best cybersecurity code of conduct and policies to help teams maintain their own cybersecurity through device maintenance, workstation access, and more. This is especially important if you give employees devices or allow personal devices to be used for work. Your IT team will have more insights on the right cybersecurity policies to make an HR matter and the proper remedies should issues arise.

 

10) Allow and Prepare for Exceptions to the Rules

Finally, be ready for exceptions. Throughout your policies, leave room for people and situations that don’t fit the mold. HR isn’t about rigid, unbending policies because humans aren’t rigid and unbending. Sometimes, you will need to let someone take a leave day without filling out the paperwork or to start work without the usual two-week waiting period. Use statements like ‘generally’ instead of ‘always’ and ‘avoid’ instead of ‘never’ so that future enforcement of your policies remains flexible instead of becoming rigid.

 

Putting Together Your HR Policies the Right Way

Human Resource policies aren’t just the rules that everyone behaves by. HR policies define your internal company culture and how employee assets are managed. HR includes payroll, regulations, equal opportunity employment, and there can also be serious consequences if your HR documents are constructed without all these necessary considerations. 

Fortunately, with foresight and the expertise of a skilled HR team, your new policies can define a company culture that runs smoothly and supports your employees in all the ways that matter. Contact us today to consult on your plans for your HR policies, procedures, and practices and how you can build and manage them the best way possible.

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The Ultimate Employment Retention Credit (ERC) Guide

The Employment Retention Credit, widely referred to as the ERC, is a refundable tax credit program provided to small businesses by the government. The program is meant to help small enterprises subsidize the costs eligible employers pay their employees to aid employee retention.

Employers can now recover up to 70% of qualified wages through the program, including health benefit expenses paid to employees since the pandemic hit. However, the ERC program is complex, and the conditions have changed so much since its implementation, adding to the confusion.

Below, we break down everything you need to know about the Employee Retention Credit (ERC) program. We will take you through its importance, eligibility requirements, and how to mitigate the financial risks of keeping your workforce employed.

The Evolution of the Employment Retention Credit

The government enacted the ERC at the beginning of the pandemic to help more employers retain their employers as the economy was shaken. Since its enactment, three laws have brought about changes and expansion of the program. 

1. Coronavirus Aid, Relief, and Economic Security (CARES) Act 

On March 13, 2020, the CARES act was enacted for qualifying employers with 1-100 W2 qualifying employees. Employers could claim the credit against 50% of qualified employee wages paid between March 13, 2020, and December 31, 2020. The credit was allowable for wages amounting to $10,000 per employee annually.

2. Consolidated Actions Act (CAA)

The CAA established in December 2020 brought enhancements to the ERC. The most notable changes include an extension of the coverage period to cover the first two-quarters of 2021 instead of ending in December 2020. In addition, employers with 1-500 employees now qualify and can claim credit tax on 70% of qualifying wages up to $10,000 per applicable quarter.

3. American Rescue Plan Act (ARPA)

According to the ARPA, employers can claim up to 70% of qualifying employee wages or a maximum of $7,000 per employee for every quarter. This is applicable for two more calendar quarters between June 30 and December 31, 2021.

Who is Eligible For ERC?

An employer qualifies for employee retention benefits if they satisfy two primary requirements:

  1. They are faced with a significant decline in their gross receipts. To qualify in the tax year 2020, you must have experienced at least a 50% reduction in gross receipts compared to a corresponding calendar quarter in 2019. This changed with the CAA and ARPA seeing that now you qualify if you see 20% gross receipts compared to an identical calendar quarter in 2019 or the quarter you started the business.
  2. They are affected by a full or partial suspension of business operations due to government COVID-19 orders. You only qualify for the portion of the quarter when your business operations are disrupted and not the whole quarter.

Applicants who already received loans under the Paycheck Protection Program (PPP) still qualify for the tax benefits from employee retention. However, this is limited to wages that are not forgiven under the PPP. 

Fortunately, employers with PPP loans can maximize their ERC benefits by including all their eligible non-payroll expenses, such as operational expenses, rent, and utilities, in their PPP forgiveness report. Additionally, employers cannot use the same wage period to apply for both benefits.

The eligibility is also based on the number of company employees, which now ranges between one and 500 employees, excluding the employer.  

  • Employers with 500 or fewer employees can apply for ERC on all qualified wages paid to all full-time employees whether the employees were working or not during the particular quarter. 
  • Employers with more than 500 full-time employees ERC can only be levied on the wages paid to employees who were not working during a specific quarter due to a company suspending its operations or a significant gross receipts decline.

What Are the Qualified Wages?

According to the ERC, qualified wages are any compensation to part or all full-time employees for a specific quarter. These include qualified health plan expenses incurred by an employer. These wages must be subject to FICA taxes and paid after March 12, 2020.

Who Is a Full-Time Employee?

According to the ERC program, a full-time employee works at least 30 hours per week or 130 hours a month during any calendar month of 2019. The full-time employee equivalent for the ERC varies from the PPC forgiveness report.

How To Apply For ERC Credits

The ERC is fully refundable and applied after the deduction of employer Social Security taxes. Furthermore, you receive any amount of excess credit of your total liability for your Social Security taxes.

The IRS issued a Notice-2021-21 to provide employers with necessary guidelines on how to claim ERC credits. According to the notice, if you are eligible, you need to calculate your qualified wages, including your Social Security and Medicare taxes, and account for this credit on IRS File 941 Employer’s Quarterly Federal Tax Return.

You should also include any qualified family leave and sick leave wages approved under the FFCRA. Employers who have already filed their year 2020 taxes can utilize the File 941-X Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund to retrospectively claim their credits for the past qualifiable quarters when wages were paid. This, however, only applies to wages paid before December 2020.

Quentelle Can Help You Maximize Your ERC

If you are looking for help with the calculation of your ERC credits, look no further. Quentelle is here to provide you with tech-driven solutions for employment verification and point-of-hire credits. We use an advanced platform and employ the best practices to provide you with streamlined income and employment verification requests.

VeriSafeJobs is our world-class platform that not only gets the job done but also keeps your private data safe and secure all the time. With us, you do not have to worry about all the complexities of the ERC, as we will handle it all for you. 

If you’d like to find out more about how we can help you simplify your ERC eligibility or claim process, schedule a demo today to see everything our superior solution can do for you. 

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Unemployment Tax Planning: How to Avoid Common Mistakes

For many businesses, paying taxes means filing federal, state, and local income taxes. Many companies overlook unemployment taxes.  Because they are paid quarterly, it’s easy to forget in the middle of hectic day-to-day operations. There’s no media presence reminding organizations to pay these taxes. It’s up to businesses to ensure that these taxes are paid on time.

Unemployment Taxes

Employers pay federal unemployment taxes (FUTA) and state unemployment taxes (SUTA). Only Alaska, New Jersey, and Pennsylvania require employees to pay a state unemployment tax. The taxes are used to fund benefits for unemployed individuals. 

Taxes are placed in a trust fund that states use to pay benefits to qualified individuals. If a state has insufficient funds, it may draw on the federal fund to help bridge the gap. Each state is responsible for administering unemployment benefits.

Unemployment taxes are paid quarterly on dates established by the IRS. Failure to pay taxes on time can result in penalties and fines. Delays in paying these taxes may result in state or federal audits. To ensure that taxes or paid on time and in full, be sure to avoid the following common mistakes.

Poor Hiring Policies

Tax planning begins before a candidate becomes an employee. Unemployment tax rates are partially based on the number of filed claims. To ensure the lowest rates possible, businesses need to minimize the number of unemployment claims. That means hiring the right candidate. When evaluating potential new hires, make sure to:

  • Evaluate how well candidates fit the corporate culture. Include individuals from across the enterprise in the interview process. Diverse interviewers provide different perspectives on how a potential employee fits with the culture.
  • Vet a candidate. Companies must perform their due diligence when it comes to checking an employee’s background. In a rush to hire, critical pieces of information can be missed.
  • Define job requirements. Take the time to review the position requirements. Using an old job description can have unfortunate consequences. No position stays the same as technologies, markets and customers change.
  • Provide training. Making sure a new hire has all the resources necessary to succeed increases the chances of a good hire. It also serves as documentation should the employee claim they were not adequately trained.

No matter how comprehensive the hiring process, companies may have to terminate an employee. How the process is handled can impact unemployment tax rates. Offering outplacement assistance may reduce the time an ex-employee is out of work. Severance packages may also minimize the eligibility period. Knowing how unemployment taxes are assessed can help organizations make informed decisions on how or when to terminate employees.

Employee Misclassification

The most common misclassification is classifying a person as a contractor rather than an employee. According to the IRS, a person is an employee if:

  • A business dictates how, when, where, and how long a person performs job responsibilities.
  • An individual is reimbursed for expenses or is provided supplies or tools without charge.
  • An individual receives defined benefits such as insurance, pension, vacation, or sick time.
  • A business considers the position to be ongoing with duties critical to the success of the company.

However, there are other classifications based on residency status, type of work, and work location. With a growing gig economy, some states such as California are attempting to enact legislation that may change employee classifications. If successful, these state laws could impact employee classifications.

Miscalculation of Taxes

Calculating state unemployment taxes depends on the state in which the employee works. If a company has employees working in different states, the tax must be calculated and paid according to its regulations. Federal taxes are calculated according to the following:

  • Taxes are based on gross pay.
  • Taxes are applied on the first $7,000 per employee per year.
  • Taxes are based on a published rate.

For example, an employee is paid $1,000 per week before any withholding or deductions are made. The tax rate is currently 6%, so the amount of tax due is $60 for a total of $420 per year. 

The IRS, which controls the federal unemployment tax, does allow certain exemptions when calculating gross pay. Some of these exemptions include fringe benefits, expense reimbursements, life and health insurance payments, and employer contributions to retirement plans.

Late or Not Filing

 What happens if you don’t have the funds to pay quarterly taxes? File anyway. If tax forms are not filed, the IRS assesses a failure-to-file penalty. The amount of the penalty is 5% of the unpaid amount. The 5% penalty is charged per month until the balance is paid in full.

To avoid filing penalties, place the weekly amounts in a separate account. If the tax payment amount is maintained in a separate account, it is less likely to be used to pay for ordinary expenses. Even with a different account, businesses, especially in the startup phase, borrow from the account to cover the costs with every intention of paying back the “loan.” Unfortunately, the repayment doesn’t happen.

Instead of not filing, organizations should file and pay whatever they can. Companies can file for extensions or contact the IRS to negotiate an installment payment plan.

Poor Record Keeping

Businesses know to keep records to support their income tax payments. They also need to keep records to support how unemployment payments were calculated. For example, how was gross pay determined for all employees? What criteria were applied to determine employee status? When did raises go into effect? Answers to these questions impact the amount of taxes to be paid.

Proper record-keeping extends beyond tax payments. Human resources must make sure that complete records are maintained on all employees. This means tracking time off, recording training performance, and documenting disciplinary actions. These records can help dispute an employee claim for unemployment.

Not Using Professionals

Unemployment taxes are more complicated than many companies realize. Unlike the federal tax laws, states differ in how they collect and process unemployment taxes and claims. Keeping up with the tax laws can be overwhelming, especially if a business has employees in multiple states. Making sure your organization complies with state and federal regulations means finding knowledgeable professionals to help. If you need a partner to help, schedule a demo to see how our solution can take the worry out of unemployment taxes.

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What to Look For in Your Human Resources Business Solution

Human Resources continues to be one of the most essential departments in the business world. Without it, your employees wouldn’t have access to the proper tools they need to stay successful.

This is why your HR department needs smart business solutions to keep the workforce thriving. With the right technologies, your HR can help prevent turnover and create more engagement among employees.

However, if you feel like your HR team has slipped behind technologically, take a look at some key things to look for as major solutions.

Verification of Employment Solution

One essential task HR takes on is verification of employment. This also usually involves income requests, requiring considerable organization based on the complex data involved. You need top-tier tech solutions to organize it all, plus keep all that sensitive information safe.

Many companies outsource this task to third-party companies. Not all companies do a good job, especially if not more focused on comprehensive HR technology.

Your best solution is going through VeriSafeJobs, offered through Quentelle, and bringing more superior reporting capability to your operations. The use of VeriSafeJobs lets you enjoy advanced metrics, so all employment verifications are thorough. A smart and simple user experience also helps with learning curves.

It’s also worth noting that VeriSafeJobs has unmatched client support, so your HR team gets questions answered fast. Privacy is taken seriously with FCRA compliance.

Simplify Unemployment Claims

Your HR group already knows the complexity of dealing with unemployment claims through your employees. The process was once very protracted, leading to possibly exhausted HR workers keeping up the pace. Most of this resulted from adhering to filing deadlines, creating issues when sending claims by regular mail.

Now you can simplify it by using ValeU NSN, a partnering company with Quentelle. This works by digitizing the entire unemployment claims process. Your company should be able to send these claims electronically, so you never miss deadlines.

The result of this is getting a week’s head-start on claims, so they’re filed sooner. Response times are ultimately faster as a result.

ValeU NSN is made for Fortune 100 companies, though any-sized company finds benefits using this solution. Implementation should also be simplified when you work with the right consultant.

Reduce Unemployment Tax Complications

Your HR department probably wouldn’t argue that dealing with unemployment taxes is one of the most complex tasks they’ve ever done. A considerable burden here is the overly complicated tax rules in each state, usually creating inaccurate data.

Our partnership with ValeU Group provides more accurate figures, so you never have to worry about tax penalties again. The benefit here is Vale U Group has more extensive knowledge of state tax rates, hence having a real unemployment tax expert in your corner.

Expect them to hunt vigorously for errors and provide the most accurate reports. These are real state tax experts who work as outsourced advisors.

Working with them, you’re guaranteed accurate unemployment tax information. Plus, you gain a dependable consultancy team on all other tax matters.

Simplify Your WOTC Program

Taking advantage of tax credits is no doubt a vital part of your business. A WOTC program is beneficial not only for you but to those you hire who have barriers to employment.

Otherwise known as Point-of-Hire tax credits, getting WOTC set up can take a lot of time for your HR team. Much of this is the pre-screening process, not including waiting to sign the 8850 form.

Our partnership with Walton gives you access to quality tax credit experts who can save you more than if letting HR handle it. Walton simplifies the process by sending digital questionnaires your employees fill out. Based on their answers, Walton finds ways to bring double the savings possibly. 

Now you can speed up the eligibility pre-screening, plus get help with other tax credits you overlooked. Read about how our partnership with Walton saved a national grocery chain double the amount from what they initially thought.

Improve Your HR Analytics

Your HR staff likely already use analytics of some sort, but how detailed are they? Not all analytic programs are great at providing the granular information HR employees need to help other company employees. When HR doesn’t see the whole picture of what’s going on, it only frustrates those they’re trying to help.

Our HR analytics engine keeps your HR workers in the know. It all starts with tapping into big data and organizing it in the most efficient ways. You can expect to bring more optimal employee performance using a better approach to big data.

Improving this further focuses on utilizing artificial intelligence to compile all the large amounts of data coming in. AI has truly advanced tenfold from just a few years ago. Now it can help organize metrics in a truly more intelligent way. Best of all, AI scopes out business trends you probably can’t see without more help.

Rounding this out is our metrics platform is fully integrated into the HR solutions suite. This enables your HR team to access all data from one source rather than from disparate data silos. Accessing information all in one place makes for more productive HR workers rather than add to their stress.

Bring a Digital Transformation to Your HR Department

Based on the above tools, you can see that a digital transformation must keep up with business challenges in today’s times. HR duties are far more complex today than a decade ago. 

Finding the right technology is the biggest hurdle. Another challenge is finding tools that integrate, so HR workers don’t have to search from multiple sources to answer critical questions.

We take technology seriously at Quentelle, where our sophisticated big data program is now renowned worldwide. Through that, we’ve incorporated AI and other emerging technologies to help advance companies to new plateaus.

Customizing is also at the center of our mission since every company’s HR department is different.

Contact us to learn more about how we can improve your HR team’s work by scheduling a demo.

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health medical worker woman holding vaccine and syringe.

News Update: Recent Changes to Point-of-Hire Tax Credits

On Wednesday, April 21, 2021, President Joe Biden announced a refundable tax credit available for select businesses that pay employees that need to take time off to get vaccinated for COVID-19.  This is part of the administration’s effort to involve employers to promote vaccination.

“Today we hit 200 million shots,” Biden said. “It’s an incredible achievement for the nation. I’m calling on every employer, large and small, in every state to give employees the time off they need with pay to get vaccinated,” said the President.

Here’s what we know about it so far:

  • The tax credit will apply to businesses with fewer than 500 employees
  • The tax credit amount equals up to two weeks (80 hours), limited up to $511 per day for each employee, and $5,110 in the aggregate at 100% of the employee’s pay rate
  • The tax credit is available between April 1 and September 30, 2021. 
  • Tax credit is refundable, meaning the employer is entitled to payment of the full amount of the credit if the tax credit amount exceeds the employer’s share of the Medicare tax
  • Employers can claim the credit on using IRS Form 941 – Employer’s Quarterly Federal Tax Return

This tax credit was authorized under The American Rescue Plan Acct of 2021 (ARP) which was signed into law on March 11, 2021.

 

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Businessman can not decide which entrance he chose outside of the maze

A Brief Guide to State Unemployment Taxes

Sifting through unemployment tax law is a difficult and time-consuming task. The heart of this problem is that each state has its own set of unemployment tax rules and regulations and is also subject to federal laws, which are standard across all 50 states. 

Interpreting unemployment tax law is a complex undertaking as it is; the COVID-19 pandemic has added multiple layers of complexity to the process. Now, with additional legislation like the CARES act and FFCRA, it can be challenging to know where to turn when you have questions about your company’s unemployment tax obligations. 

In this article, we’re going to look at the critical components of unemployment tax law, discuss how current Coronavirus relief legislation modifies those existing rules, and establish a list of quality resources that you can turn to to get your important questions answered.  

Unemployment Tax: Key Things You Need to Know

Unemployment tax was first established under the Federal Unemployment Tax Act (FUTA) of 1939. This piece of legislation, which was created in response to the Great Depression, has evolved to address the modern workforce’s needs. The law was designed to offset unemployment’s social and economic impact by placing a portion of the cost onto employers in general. 

FUTA funds unemployment by collecting a payroll tax. However, it should be noted that this tax is only levied against you as a business owner, not against your employees’ paychecks. While the amount of tax that the federal government collects has changed over the years with updates to the legislation, the way that the tax is assessed has remained the same. Through 2020, the tax rate was set at 6% of the employee’s first $7,000 in wages per year. That means that the employer takes 6% from a minimal, predetermined amount rather than the employee’s overall salary. It should be noted that the tax is not assessed on employees who make $1,000 or less per calendar year. Tax is also not collected on employees aged 21 or under. 

The basic method for figuring out your company’s unemployment responsibility is:

  • $7,000 x 0.06= $420/employee/year
  • $420 x total number of employees= unemployment tax obligation

The current FUTA standard also makes a provision for a 5.4% tax credit, which results in a tax bill of $42 per employee every year. To qualify for the credit, your company must pay state unemployment tax and file form 940 (which is a yearly requirement anyway) with the IRS.  

The challenge to employers comes with state unemployment taxes, as every state administers its own unemployment program, and imposes an employer-funded tax levy. Below, we’ll provide a more comprehensive guide to available resources that can help you determine the rules for your particular state.   

When figuring your unemployment tax burden, you should inquire if certain types of payments are excluded from the overall calculation. Those types of payments include:

  • 401(k) contributions
  • Life Insurance
  • Fringe benefits and per diem payments
  • Childcare allowances

Employers are required to pay their unemployment tax quarterly throughout the year.

A Wrench in the Works: the CARES Act

Along with the COVID-19 pandemic, there came a surge in unemployment cases nationwide. At one point, the US economy suspended or eliminated more than 22 million jobs. Several legislative remedies were passed into law, including the FFCRA, which extended the definition of emergency paid leave. The CARES act offered additional unemployment insurance up to $600 dollars per week. There is an old saying, however: there’s no such thing as a free lunch. 

While the CARE Act served as a lifeline for many struggling families, there are tax implications to receiving that kind of governmental assistance. Employees who failed to set aside taxes might find themselves without their expected refund. 

For employers, the CARES act results in additional paperwork and due diligence. While the federal government fully funds the unemployment insurance itself, each state has its own mechanism for carrying out the program, complete with qualification requirements and reporting. The bottom line? Unemployment tax is already muddy water; pandemic-related legislation just opened the floodgates.  

Resources to Help

So the burden of understanding unemployment benefits and their associated tax burden falls to the employer. But with each state in charge of its own rules —on top of federal requirements— that’s no easy task. Information differs on a state-by-state basis, and even then, it can be difficult territory to wade through. Where to begin? 

The single best place to start your search is with the United States Department of Labor (DOL). They have a page set up specifically for employers that links to each state’s unemployment insurance program. This site gives employers a contact list at a glance and helps empower HR and accounting staff to find good, quality information on a state level.

To understand how unemployment insurance —including the CARES act— works for the employee, the DOL also offers a website geared toward the workforce filled with valuable information and necessary forms.  

For information on federal unemployment programs, the top-level governmental website, USA.gov, has an unemployment-related directory filled with information related to numerous national programs as well as additional high-quality resources. 

If, for some reason, the government-curated resources don’t answer your question, or you find them obtuse and difficult to use, numerous third-party organizations such as the Tax Foundation strive to bring up-to-date information to the American workforce, including employers. 

Enlisting Personalized Help

Understanding tax laws is difficult no matter what type of tax you’re working with. There is no substitute for getting advice from a professional resource. The Quentelle platform is proud to partner with the ValeU Group to provide unemployment tax planning services through our technology and consultancy expertise. For more information, please contact us today. 

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Headshot of Michael McConnell COO of Quentelle

Quentelle Names Mike McConnell Chief Operating Officer

Quentelle, LLC, is pleased to announce today that Mike McConnell, Vice President of Quentelle has been promoted to Vice President and Chief Operating Officer.

“Mike is a proven and trusted leader that consistently delivers results. His unique skills and laser-focused operational expertise will streamline and continue to drive operational excellence,” said Stephen Wain, Chairman & Managing Member of Quentelle. “Mike’s ability to pursue excellence while engendering organizational growth and results make him uniquely suited for this position. As Quentelle grows our leading software platform and associated offerings, Mike’s ability to help bring products and services to market will usher in new opportunities for our clients.” Under his new role, Mike will assume responsibility for operations, engineering, marketing, sales, and service; leading all efforts to streamline product delivery and customer services/experience.

Quentelle’s story has never been more compelling and relevant. It’s been amazing to see how our innovation has captured the hearts and minds of the customers and partners we serve,” said McConnell, “I am extremely excited to help lead the company to its next phase of innovation and operational excellence.”

“Mike has been instrumental in the rapid growth of our business and has delivered results and earned the respect of all members within our organization. I’m happy to work with Mike on the growth of Quentelle,” said Phil Ownbey, Quentelle’s President.

Prior to his appointment, McConnell was responsible for product deployment as well as marketing and service delivery. McConnell joined Quentelle in 2018 after selling a successful healthcare franchise business he founded Prior to that, he worked in various industries including manufacturing and defense electronics, spanning over twenty years. Michael earned a Bachelor of Science degree from Penn State University and is also a proud veteran of the US Armed Forces.

Headquartered in New Jersey, with staff nationally and worldwide, Quentelle is a business and artificial intelligence technology company, and the developers of ForeSite™, a data intelligence platform that allows third-party developers and their applications to provide state-of-the-art information as part of their applications. Quentelle is the developer of VeriSafeJobs™, a nationally recognized Verification of Employment/Income SaaS application that works under the ForeSite™ platform that services Fortune 500 and mid-size entities who require greater insight into the needs of their employees, as well as outside entities and government agencies. Quentelle works with information collected to provide actionable insights to enhance partner products and service offerings. Its platform works across many industries, and is currently working on areas such as HRIS, Medical, and Cybersecurity.

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Recruitment concept to hiring of a new talented specialists for international company. Handshake to sign in of employment agreement. Social media hologram icons over the table with documents

When Your Company and Employees Might Need Verification Of Employment

According to cnbc.com, 78% of employees lie during the hiring process.  Many of these falsehoods are on resumes.  Since it is not illegal to lie on a resume, most companies use some form of employment verification to ensure the accuracy of a candidate’s work history.  On the other hand, employers must comply with legal requirements when providing employment information on current or past employees.  

Verification of employment (VOE) requests can come from a number of sources:

  • Government agencies
  • Lenders
  • Collection Agencies
  • New employers

In most instances, they are looking for information on employment dates, wages, and the potential of continued employment.  Potential employers may ask for the reason for termination and the possibility of rehiring. 

What Information Should Be Provided?

Information requests fall into two groups:

  • Employment Verification
  • Income Verification

Each state has rules governing the information that can be released.  For example, some states such as California and New York prohibit employers from releasing salary information to potential employers.  The best option is to ask employees to sign a consent to release information form before releasing employee-specific data.

Federal law prohibits discrimination based on race, religion, color, sex, gender identity, age, disability, nation of origin, or genetic profile.  It’s essential that an organization have well-defined policies regarding VOE information to avoid possible violations.

Employment Verification

Potential employers want to verify that an employee worked at the companies listed in their work history.  Typical VOE requests ask for the following:

  • Employee Name
  • Employee Job Title
  • Employment Dates
  • Employer’s Address

In some cases, they may ask about job responsibilities or performance. Answering these questions during the hiring process can prove problematic.  It is recommended that employers only provide additional information after consulting with legal experts.

Income Verification

States vary on whether salary information can be provided during the hiring process.  Be sure to check with state regulations before releasing wage or salary information.  Employees may want employers to release income information as part of loan application processing.  Government agencies may need information if employees or former employees are applying for assistance.  Consider establishing a policy that requires employees to provide written consent to release income information.  

Circumstances that may require the release of income data may include:

  • Loan Approvals:  Buying or refinancing a home requires income data to ensure that the loan terms can be met.
  • Credit Applications:  Granting a person’s credit request depends on credit score as well as the ability to repay.  
  • Garnishment:  If an employee receives a court-ordered garnishment such as child support or back taxes, income information will be required to determine the amount of the garnishment.  
  • Lease Agreements:  Property managers may require verification of income to ensure the tenants can manage monthly payments.  

 Before releasing information, check with the employee.

When Should Information Be Provided?

The only time an employer must comply with a VOE request is when it comes from a government agency.  These requests will often be very specific and include a reference to a legal statute supporting the request.  The request should also have a comply-by-date.  If it does not, contact the issuing agency for clarification, although it is always advisable to respond to a government request as quickly as possible.

Government Requests

Government agencies may need to verify income to determine child support or alimony payments.  They may request information to help with possible identity theft or confirm fraudulent use of government funds or services.  As long as the information is accurate and given in good faith, an employer should not suffer any adverse effects.

Private Requests

Employers are under no obligation to release information to lenders or other private companies.  However, withholding that information places employees at a disadvantage.  With the number of attempts to steal identities, employers may want to require that employees notify them of potential requests.   Providing employees with a form to date and sign is an easy way to receive notification and signed consent for the release of information.

If contacted by a prospective employer, a current or former company should provide the basic information for employment verification.  Any information beyond the basic should only be provided with the signed consent of the employee.  In some instances, additional information may be needed for individuals working in industries such as education or health care.  Be sure to check with local authorities for guidance.

Third-Party Requests

Requests from third parties such as collection agencies should be ignored; however, employers should check with legal authorities to prepare a policy for handling requests by a third party.

When Should Health and Disability Data Be Provided?

All information regarding an employee’s health or disability status is protected by law.

  • The Americans with Disabilities Act of 1990 makes it illegal to discriminate based on a disability.
  • The Health Insurance Portability and Accountability Act of 1996 protects a person’s health information from release to unauthorized individuals.

Information related to an employee’s health or disability should never be released without consent. When to Get Help?

As a small employer, you may have a few routine VOE requests in a year — maybe every two or three years.  For larger organizations, the number of VOE requests can be significant, especially in times of high unemployment or a booming housing market.  Given the amount of processing time involved, the cost of in-house VOE can run into the thousands.

It’s not just the direct cost of an individual’s time but also the opportunity cost resulting from the person focusing on VOE responses rather than a solution with more impact on the bottom line.  If you’re interested in seeing how much Quentelle’s solution can save you, check out our savings calculator.  Then, contact us to schedule a demo.  

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