© 2022 American Payroll Institute, Inc. APA Offers California Help With Lump-Sum Reporting The APA Government Relation Task Force (GRTF) Child Support Subcommittee contacted the California Department of Child Support Services (DCSS) in May with recommendations to enhance DCSS’s current practices on lump-sum reporting and processing for child support. California’s child support law includes some basic language on bonuses and commissions but does not specifically identify lump-sum payments in the definition of income. DCSS’s website describes voluntary lump-sum reporting by employers for child support arrears as a special circumstance. However, mandatory requirements have not been issued. APA’s recommendations The APA said that if DCSS finds that California law does not create the jurisdiction to develop a lump-sum payment program, then the practices listed on the DCSS’s website should be removed. Conversely, if existing law allows the DCSS to include lump-sum payments in child support, then binding regulations should be issued. The APA offered to assist in the development of legislation or regulations to ensure that DCSS has a viable lump-sum payment program. The APA said that by relying on desired practices rather than mandatory requirements, equity issues can arise for employees when one employer follows the practices and another does not. Employers that report lump-sum payments when reporting is not required can be challenged by employees even when these employees are in arrears. The GRTF Child Support Subcommittee participates in the National Council of Child Support Directors’ (NCCSD) Child Support Employer Collaboration Workgroup with the goal of improving communication between states and employers, such as establishing more streamlined procedures for processing child support orders. The workgroup developed “Model Legislation on Managing Lump-Sum Payments for Child Support” in 2019. The APA recommended that California use the model to create state requirements. Employer notification and state response time The DCSS requests that employers report lump- sum payments “prior to payout” to employees. These DCSS requests are vague on exactly what information employers should report and when it should be reported. In addition, the DCSS offers various methods for reporting and each could result in different information provided to the state. The APA’s preferred method of reporting lump- sum payments is through use of the federal Office of Child Support Enforcement’s (OCSE) Child Support Portal. The APA also recommended that DCSS establish a set standard response time from the date that it is notified by employers of a lump-sum payment. California has not established a timeframe for employers to receive a response following notification of a lump-sum payment. The online state matrix on OCSE’s website implies that employers should hold employees’ lump-sum pay for seven days from the payout date. This can lead employers to run afoul of California’s wage and hour laws that forbid employers from holding employees’ pay without a child support order in process. The establishment of a response time based on the reporting date would ensure that employers are not exposed to wage and hour law violations. Employers could also automate and streamline internal processes when requirements are made clear. Government Relations Highlights From 40th Payroll Congress In May, APA and GPMI’s Annual Payroll Congress Convention and Expo returned to an in-person event following two years of virtual conferences during the COVID-19 pandemic. Attendees had the opportunity to hear directly from APA’s Government Relations staff and federal government partners. Legislative outlook and APA advocacy APA’s Government Relations staff addressed some of the key legislative and regulatory issues discussed by members participating in the Government Relations Task Force (GRTF). Nexus. Workshops addressed trends in employee work location and highlighted the findings in APA’s report on temporary presence and business nexus, “Employees Are Where? Presence, Nexus, and Employment Taxes: A Payroll Analysis.” The report provides a baseline for action using data on the percentage of the workforce that works remotely and the difficulties that employers and payroll professionals face as they navigate a post COVID-19 world. The report can be downloaded for free from APA’s website on the Hot Topics Multi-State Taxation page. Digital currencies. Another issue discussed was the June 2022 A Supplement to Payroll Currently, Issue 6, Volume 30
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