Regulatory Roundup November 2022

With winter holidays firmly on the horizon, November had a few legislative updates at the federal and state levels. The Department of Labor announced the states that will have Federal Unemployment Tax Act (FUTA) credit reductions for their 2022 filings, while the Internal Revenue Service (IRS) announced the Patient-Centered Outcomes Research Institute (PCORI) trust fund fees for 2023. Meanwhile, the White House extended its pause on student loan repayments due to ongoing litigation with the Student Loan Forgiveness program. Finally, the state of Arizona released an updated income tax form that accounts for the state’s lower tax rates. Learn more about these updates below in this month’s Regulatory Roundup.

FUTA Credit Reduction States

The Department of Labor announced that four states (California, Connecticut, Illinois, and New York) will face a 0.3% credit reduction for having an outstanding advance on January 1, 2021, and January 1, 2022, that was not paid back before November 10, 2022. This will cost employers in each state an additional $21 in FUTA taxes per employee moving forward. Additionally, employers in the Virgin Islands will pay substantially higher FUTA taxes as credits for the territory were reduced by 3.6%. This will cost employers in the region an extra $252 in FUTA taxes per employee moving forward.

2023 PCORI Fee

The IRS announced the PCORI trust fund fee for health insurance policies or plan years ending on or after October 1, 2022, and before October 1, 2023, will be $3. Running until September 30, 2029, the PCORI fee applies to issuers of certain health insurance policies and plan sponsors of applicable self-insured health plans, and it helps to fund the PCORI as a whole. The fee is due annually by July 31 of the year following the last day of the applicable plan year. For example, plan years that end in 2022 must pay their PCORI fee by July 31, 2023. For more information, refer to the IRS’ overview page on the program.

Student Loan Repayment Pause Extended

Multiple states filed lawsuits in November challenging the legality of President Biden’s student loan relief program. In response to the uncertainty regarding the resolution of these cases, all student loan repayments, interests, and collections were paused until December 31, 2022. On November 22, the Department of Education extended this pause until June 30, 2023. The final legality of the forgiveness program will be decided by the U.S. Supreme Court. If deemed legal, the pause would be further extended another 60 days, at which point requests for forgiveness would be implemented and regular repayments would resume. If deemed illegal, regular repayments will resume 60 days after the date of the court’s ruling.

Arizona's Updated A-4 Form

The state’s new withholding certificate, Form A-4, reflects Arizona’s lower individual income tax rates, which range from 0.5%–3.5%. All employers must provide this form to their Arizona-based employees no later than January 31, 2023, and all impacted employees must complete and submit the form by February 15, 2023, or else their payroll providers must use the default rate of 2% until the form is received.

Additional Information

Get more details on the compliance updates from November here:

• FUTA Credit Reduction States Released for 2022
• 2023 PCORI Fee Released
• Student Loan Forgiveness Program
• AZ A-4 Form Updated to Reflect Lower Rates

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This information is provided as a courtesy, may change, and is not intended as legal or tax guidance. Employers with questions or concerns outside the scope of a Payroll Service Provider are encouraged to seek the advice of a qualified CPA, Tax Attorney, or Advisor.