The changes affect all contributory employers. A contributory employer is an employer that calculates its quarterly unemployment tax due by multiplying its taxable wages by its tax rate. Throughout this Tax Information Publication (TIP), "employer" means contributory employer.

Change to Rate Calculation
Changes to certain factors used in the 2010 tax rate calculation have been postponed until 2012. The Department of Revenue will mail a new 2010 Unemployment Compensation Tax Rate Notice (Form UCT-20) to each employer by late March. This mailing replaces the UCT-20 notices mailed in December 2009. Generally, employers with the Minimum Tax Rate (Reason Code D) or an Earned Tax Rate (Reason Code G) will see a decreased rate. No rates will increase because of this legislation.

Change to Taxable Wage Base
The amount of wages per employee subject to unemployment tax (the taxable wage base) was $7,000 in 2009. The taxable wage base was scheduled to increase to $8,500 in calendar year 2010. The new law keeps the taxable wage base at $7,000 for 2010 and 2011. It will increase to $8,500 in the years 2012 through at least 2014.

The State of Florida has been borrowing funds from the federal government to pay unemployment compensation benefits since the state trust fund was depleted in 2009. If the state has not fully repaid the principal of the loans by the end of 2014, the taxable wage base will remain $8,500 until the federal loans have been fully repaid.

Installment Payment Options
Typically, the Employer's Quarterly Report (Form UCT-6) and full payment of the quarterly tax are due by April 30, July 31, October 31, and January 31 (of the following year). The new law allows employers to make installment payments for the first three quarters in 2010 and 2011 if the UCT-6 and installment payment are submitted on time. An employer who chooses to pay in installments must pay an installment fee of $5.00 one time per calendar year, with the UCT-6 for the quarter in which the election for installments is made. The Department will provide several options for employers to submit the additional installment payments.

Here's how the installment option will work:
The tax amount due with the first quarterly unemployment tax report (quarter ending March 31 and due by April 30), may be paid in four equal payments using these dates:

The tax amount due with the second quarterly unemployment tax report (quarter ending June 30 and due by July 31), may be paid in three equal payments using these dates:

The tax amount due with the third quarterly unemployment tax report (quarter ending September 30, and due by October 31), may be paid in two equal payments using these dates:

The installment method does not apply to the fourth quarter ending December 31. The entire amount of tax due for the fourth quarter of each year is due by January 31 of the following year.
Employers who are required to file and pay electronically must also submit installment payments electronically.

If an employer becomes liable to file and pay unemployment tax after the first quarter of 2010 or 2011 and wants to pay by the installment method, the employer must submit the $5.00 installment fee and the correct installment payment with the first Employer's Quarterly Return (Form UCT-6) filed.

If an employer files Form UCT-6 and makes the installment payments in full and on time every quarter, no interest will be due. If any of the installment payments for any of the first three quarters are not paid on time and in full, the employer has not met the requirements of the law. Interest and fees will be due on all tax amounts not paid for that quarter by the installment due date. Penalties may also be assessed.

The employer may pay more than the minimum tax due with any installment payment. If an installment payment is less than the required amount, the Department will calculate interest on the underpayment and bill the employer. Payments made using the installment method do not change the original due date of the Employer's Quarterly Report (Form UCT-6).

Employers may wish to sign up for the Department's due date reminder service, where we send e-mail notices of upcoming due dates. Look for the "Subscribe to Our Publications" link on our website.

Special Annual Assessment for Federal Interest
As mentioned earlier, the State of Florida borrowed funds from the federal government for the Unemployment Compensation Trust Fund so the state could continue to pay unemployment compensation benefits. The state will continue to borrow funds from the federal government until collections can fund benefit payments. The state must pay interest on these loans unless the federal government waives the annual interest obligation. If the state owes interest, all contributory employers will have to pay a share of the federal interest bill. If this occurs, employers will be notified.

(January 5, 2010) The IRS on Monday announced plans to require mandatory registration of all paid, signing tax return preparers as well as competency testing and CPE requirements for preparers other than CPAs, attorneys or enrolled agents. The plan also calls for extending Circular 230’s ethics rules to all return preparers.

Following a review of the tax return preparation industry, the IRS released a much-anticipated report on a new regime for regulating preparers. The report says the IRS will implement various recommendations, but it is silent about how implementation will occur or what the effective dates will be; however, the IRS stated in a separate fact sheet (FS-2010-1) that the changes will not affect the 2010 filing season.

Background
On June 4, IRS Commissioner Douglas Shulman announced during testimony before the House Ways and Means Subcommittee on Oversight that the IRS would propose new regulations for paid tax return preparers to ensure “all preparers are ethical, provide good service and are qualified.”

The IRS held three public forums over the summer to hear the views of consumers, the tax preparer community, providers of tax preparation software programs, state regulators and legislators in states that have passed laws requiring tax preparer registration (Oregon, California, Maryland and New York), the Government Accountability Office and the Treasury Inspector General for Tax Administration.

The IRS report says that at the hearings, commentators “overwhelmingly expressed support for efforts to increase the oversight of paid tax return preparers, particularly for those who are not attorneys, certified public accountants, or other individuals authorized to practice before the IRS.” Currently, anyone can prepare a federal tax return for any other person for a fee, and such unenrolled preparers have no federal minimum training requirements and relatively little administrative oversight.

Mandatory Tax Return Preparer Registration
As recommended in the report, the IRS plans to require all paid, signing tax return preparers to register and obtain a preparer tax identification number (PTIN). Preparers will have to use that number exclusively when submitting returns to the IRS. Preparers will be required to re-register every three years and will be subject to a tax compliance check when they renew. Tax return preparers who are not in compliance will be referred to the IRS Office of Professional Responsibility for possible disciplinary action.

The report says the IRS plans to study whether to expand this requirement to nonsigning preparers.

Competency Testing
The IRS plans to require paid tax return preparers to take a competency test. CPAs, attorneys and enrolled agents will be exempt from the testing requirement, although the report says the IRS will assess the quality of returns prepared by exempted individuals to determine whether those groups need to be included in the testing requirement in the future. Other than members of the exempted groups, no other preparers will be exempt from the testing requirement, no matter how much prior return preparation experience they have.

At first there will be two tests: One on wage and nonbusiness income on Form 1040 returns, the other on wage and small business income on Form 1040 returns. After an initial three-year implementation phase, the IRS plans to add a third test on business tax rules. Preparers will be required to meet the competency test requirements within three years from the initial implementation of the tests.

Continuing Professional Education
All tax return preparers who are required to register with the IRS will be required to complete 15 hours of continuing professional education each year. The 15 hours must include three hours on federal tax law updates, two hours on tax preparer ethics and 10 hours on federal tax law topics.

CPAs, attorneys, enrolled agents and others enrolled to practice before the IRS will be exempt from the CPE requirement because these individuals generally must complete continuing education requirements to retain their professional credentials. However, the IRS says it plans to assess the quality of returns prepared by the exempt groups to determine if it needs to impose a CPE requirement on them in the future.

Circular 230 Ethical Standards
The IRS plans to place all signing and nonsigning tax return preparers under Circular 230, which will require them to follow Circular 230’s standards of conduct. However, this does not represent an expansion of those who are authorized to practice before the IRS; those return preparers who are not CPAs, attorneys, enrolled agents, enrolled actuaries or enrolled retirement plan agents will be authorized only to prepare tax returns and represent their clients as currently permitted during an examination of any return prepared by the tax return preparer under Сircular 230, § 10.7(viii).

Enforcement
The IRS report says the IRS plans to implement a comprehensive enforcement strategy, including applying significant examination and collection resources to tax return preparer compliance.

Refund Anticipation Loans
The report also says the IRS will convene a working group to review the refund settlement product industry (that is, refund anticipation loans and refund anticipation checks).