Confused about a specific term or acronym? Solve the mysteries of terminology with this informative resource. Updated regularly with industry-specific vocabulary and concepts, the Glossary provides easy-to-understand definitions of tax-related terms.
Backup Withholding Usually Federal Income Tax (FIT) withheld from interest payments to a customer's bank account when no Social Security Number is on file. Financial institutions are required to deposit and report this withholding with their federal payroll taxes on Form 945. Banks, savings and loans, and similar types of institutions are required by law to withhold 31% of taxable interest or dividends paid on accounts that have failed to furnish correct taxpayer identification numbers (Social Security numbers).
Bank Release Date The day the payroll tax debit is sent to the bank.
Bankruptcy The attachment of all or a portion of an employee’s wages to satisfy outstanding debts. Usually, this lien type has the highest priority.When you receive a bankruptcy order, you must inactivate all other liens(except, in most cases, support orders). Currently, all bankruptcies are issued by a federal court
Base Period Utilized in the calculation for unemployment benefits, this is the period usually consisting of the first four of the last five completed calendar quarters immediately preceding the beginning of a claimant's benefit year. In some states, the base period consists of the 52 weeks prior to the benefit year. The base period is used to determine a claimant's monetary eligibility and benefit entitlement, as well as the employers' liability.
Base Period (Employer) The period for measuring a qualified employer's past experience with unemployment; the four fiscal years preceding the computation date (July 1 of each year). For claimants, the base period is the base year.
Benefit Accrual Hours that are considered an employee benefit, such as paid vacation or paid sick hours, are sometimes accumulated (accrued) by the employee over a period of time.
Benefit Charge Audit ADP-UCS audits the accuracy of statements received for each of the State Unemployment Insurance (SUI) accounts we represent. The audit process includes verifying the validity of all charges. This includes verification that the maximum liability has not been exceeded, the weekly benefit amount has been properly calculated that the individual is eligible for benefits and sufficient earnings were reported. Charges assessed in error are protested to the appropriate state agency. Protests and responses are closely monitored and the outcome is reported to the employer.
Benefit Charging Unemployment Compensation Benefit amounts paid to an individual. The benefit amount is based on the amount of wages the employer paid the employee during the base period. The base period is a four-quarter period, most commonly the first four of the last five completed calendar quarters, used by the state to determine benefit eligibility. The states also use the base period to pinpoint an individual's chargeable employers. How much each employer will be charged is based on one of several charging methods. (Also see: Benefit Wage, Employer with Majority of Wages, Inverse Chronological Order, Most Recent Employer, & Prorating)
Benefit Eligibility Conditions Statutory requirements which must be satisfied by an individual with respect to each week of unemployment for which compensation or allowance payments are claimed before payment for the week is made. The most basic requirement in order to receive benefits is that the claimant must be out of work through no fault of their own.
Benefit Formula A mathematical formula specified in State unemployment compensation law or Federal laws used as the basis for determining an individual's weekly benefit amount and potential maximum benefit entitlement.
Benefit Ratio (BR) A calculated formula used by some states to compute the Unemployment Insurance Experience Tax Rate. The Benefit Ratio is computed by dividing the taxable wages for the previous three to five year period by the benefits charged for the same period. In most states, this ratio is then compared to the state-rating table to determine the employer tax rate.
Benefit Ratio Formula 3 or more years Benefit Charges (divided by) Taxable Payroll for the same period = BENEFIT RATIO
Benefits The monetary amount paid to an unemployed or partially unemployed worker.
Benefit Wage Delaware and Oklahoma use this benefit charging method. Each base period employer is charged an amount equal to the amount of wages it paid the individual during the base period, up to a set liability amount. Charging is triggered when the individual has collected a specified number of weeks of benefits.
To help offset the increased liability, the states using the benefit wage charging method provide rehire credits to any employer that rehires a former employee during his benefit year (the year following the initial filing of an unemployment claim). To receive a rehire credit against benefit wages charged to its account an employer must send a request letter to the state.
Delaware employers must submit their request within 90 days from the end of the individual's benefit year.
Oklahoma employers must request the credit within 30 days following the end of the individual's benefit year or the receipt of a charge statement whichever is later. The credit is then applied to future rate computations. (Also see: Benefit Wage Ratio)
Benefit Wage Formula 3 years Benefit Wages (divided by) 3 years Taxable Payroll = BENEFIT WAGE RATIO (Also see: Benefit Wage Ratio)
Benefit Wage Ratio (BWR) A calculated formula used by the state to compute the Unemployment Insurance Experience Tax Rate. The Benefit Wage Ratio is computed by dividing the benefit wages for the previous three to five year period by the benefits charged for the same period. This ratio is then compared to the state rating table to determine the employer tax rate. This formula is currently used in Delaware and Oklahoma.
Biweekly Once every two weeks; type of payroll period that can be used in the percentage of wage-bracket method of withholding.
Bonus Compensation received by an employee for services performed. A bonus is given in addition to an employee's usual compensation.
Branch Code A two-digit alpha or numeric code assigned to identify each ADP Payroll Region.
Branch Reporting and Location Coding Under most circumstances each employer with its own unique federal identification number (FEIN) receives one state account number, under which the wages for all of its locations or branches are reported. However, in some states, multi-location employers may have the option to use a branch reporting or location coding method of reporting. Some states allow multiple location employers to request that each location or branch be assigned its own separate state account number referred to as branch reporting. This allows the location to file its own contribution and/or wage reports and makes it easy for the state to allocate benefit charging to the location. Notices of claims filed and benefit charge statements could then be mailed to the applicable location or to ADP-UCS, depending on the state law.
Business Tax Credit for Employer-paid FICA on Tips This tax credit is available to employers at food and beverage establishments --- not to other types of tipped employment. Also, it applies only with respect to tips not already used to support a tip credit for minimum wage rate purposes. The credit is against the business income tax of the employer and is claimed by filing IRS Form 8846, Credit for Employer Social Security and Medicare Taxes Paid on Certain Employee Tips.