• 6% for large corporate underpayments
• 4% for underpayments
• 3% for corporate overpayments, and
• 1.5% for the portion of a corporate overpayment that is more than $10,000.

Here are the key points:

QACAs

• Minimum percentage requirements — Plans must have a schedule of automatic contributions pr “qualified percentages” for eligible employees. They start at 3% for the intial period an employee is in the plan (up to two years). Following the intial period, the minimum qualified percentage increases by 1% point each year, for three years. The qualified percentage can never exceed 10% of an employee’s compensation.
• Uniformity requirement — The qualified percentage has to be applied to all eligible employees.
• Default and/or Affirmative elections — Default elections no longer apply to employees if they make an affirmative election to either not have contributions made or to make contributions at another percentage.

EACAs

• Withdrawal elections — Elections to withdraw contributions made under an EACA must be made within 90 days of the first elective contribution an employee makes.
• Non-universal eligible automatic contribution arrangements — Under an EACA, automatic enrollment doesn’t have to apply to all employees. It can apply only to those employees designated as covered by the company’s specific EACA.

You can download the regulations in their entirety and get all the nitty-gritty details here.

Now, IRS will continue to go after unpaid taxes using internal resources: It plans to hire approximately 1,000 new collection agents this year.

Bear in mind: Private letter rulings (PLRs) only apply to the companies seeking them. But they do give you an idea of how IRS looks at certain issues.

In this case, employees sued the company for unpaid leave and vacation time. As part of the settlement, the court ordered the company to pay attorney’s fees for the employees in the suit. According to the PLR, the awarding of attorney’s fees is essentially a reimbursement of an expense. Therefore, it’s not subject to taxes or reporting.

You can the download the PLR here to see all the details.

If IRS finds problems/misinformation is common enough, you can expect increased audits and enforcement in this area.

The site, which has made improvements to search functions, ease of navigation and other areas where users complained it was lacking, gained eight points on a scale of 1 to 100, giving it a solid “C.”

No doubt there’s still room for improvement — but at least it’s headed in the right direction.

IRS has warned its going to start doing random employment tax audits in 2010. It’s aim: To find out exactly how much tax revenue the feds are losing due to employees being misclassified as independent contractors (ICs).

IC classification has always been a gray area — which is why many companies have relied on making an educated guess and then knocking on wood. Without any other red flags, many potentially misclassified employees (and their employers) have flown under the radar.

Random audits could be done at any company — there’s no way to minimize your risk of getting flagged.

What you can do: Go through your hiring procedures now and review the work done by ICs. The first random audits won’t be done until around April 2010, so there’s still time to address any questionable classifications you have on your books.

To claim the credit, you’ll need the proper documentation:

• Proof you received the employee’s share of the premium (35%)
• A declaration that the former employee was “involuntarily terminated,” and
• For insured plans, a copy of the invoice or similar statement from the insurance carrier, as well as proof the premium was paid on time.

You can claim your credit on Form 941, starting with the first quarter of ’09.

IRS has also released a new FAQ page for employers who need more details on the new procedure. If employees (or former employees) have questions about their rights and responsibilities, you can refer them to this page, which has several links to even more info.

The new rates are the feds’ method of implementing the “Making Work Pay” credit in the recently passed stimulus package.

The new withholding tables are in effect for wages paid through Dec. 2009. The tables, as well as instructions on how to comply with the new law, will be incorporated into a new IRS Publication 15-T. Pub. 15-T will be posted on IRS’ site next week, and mailed to employers in mid-March. But you can already get a sneak peek here.

Until you get the final, official publication, here are the key points you need to know:

• IRS requests employers start using the new withholding tables as soon as possible, but no later than April 1.
• Workers don’t need to submit a new W-4 to get the credit, but they will have to claim it when they do their ’09 taxes. (Note: Workers who have multiple jobs may want to review their W-4s to ensure they have enough withholding being done.)

Note: The credit phases out for higher-income employees. Be prepared for questions from them, and other employees who may not understand how the tax credit works or how they can get the benefit.

The facts

When they were on call, drivers had to:

• respond to calls within 8 minutes, including driving to the squad house and picking up an ambulance
• be reachable at all times, and
• refrain from using alcohol and other substances that might impair their judgment.

The number of calls the drivers had to respond to varied greatly. In the winter, it was common to respond every day; other times of the year, a week could pass without being called. Drivers couldn’t trade on-call shifts (there weren’t enough drivers to cover them all) and they couldn’t refuse to respond to a call.

Ruling

DOL ruled that on call time was compensable during the winter because drivers couldn’t freely engage in most personal activities. Due to the frequency of the calls and the speedy response required, any personal activities were severely restricted.

However, on-call periods at other times of the year were not deemed compensable. Because the calls were so infrequent, the drivers’ personal activities weren’t as restricted.