Glossary

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.

Results:

CAA Client Account Agreement. A CAA is used to authorize the transfer of funds from a client's bank to ADP.

Cafeteria Plans A plan that offers flexible benefits under the Internal Revenue Code Section 125. Employees choose their benefits from a "menu" of cash and qualified benefits,offered by an employer. some of which can be paid with pretax deductions from wages. Benefits that may be offered under a cafeteria plan include accident and health insurance, dependent care assistance, group legal services, group term life insurance (although life insurance in excess of $50,000 is includible in gross income), and additional vacation days.

Calendar Quarter The three-month period beginning on the first day of January, April, July and October each year and ending on the last day of March, June, September and December, respectively.

Calendar Quarter The four quarters of the year as follows: January to March, April to June, July to September, and October to December.

Calendar Week The seven consecutive day period beginning on Sunday and ending the following Saturday.

Calendar Year January 1 through December 31. (Also see: Fiscal Year)

Case/Docket Number A court-assigned number that identifies a judgment against an obligor and the resulting lien

CD See Check Digit.

Charge Statement Statement of Unemployment Benefit Charge payments made to former employees. Issuance of benefit charge statements is weekly, monthly, quarterly or annually depending on the state regulations.

Check Digit (CD) A calculated digit used to verify a series of numbers. Most commonly used by taxing agencies to verify identification numbers.

Child Support Payments made to the custodial parent for the care of dependents.See also Support Order

Child Support Withholding The process of withholding amounts from an employee’s compensation to satisfy a child support order from a court or state child welfare administrative agency. The employer is responsible for withholding the amounts and paying them over to the party named in the withholding order.

Choice of Financing (Reimbursing Analysis) This analysis compares taxes paid, benefits charged and taxable wages during a one to three year period to determine the most beneficial unemployment funding option (experience rated or reimbursing). The reimbursing option is only available to not-for-profit entities.

Circular ‘E’ Federal employer’s tax guide. Changes each year and states current federal tax and deposit rules as well as rates.

CIT See City or Local Income Tax.

City or Local Income Tax A withholding tax deducted from an employee's wages as required by a city or local jurisdiction. The amount of withholding varies with the amount of earnings, frequency of pay, number of claimed exemptions, and marital status.

Claim Formal statement made by a former employee for the purpose of obtaining unemployment benefits.

Claimant A totally or partially unemployed individual who has filed a claim for unemployment benefits.

Claimant Commonly used term by the State Unemployment Agency for the person who has filed a claim for unemployment compensation benefits.

Claimant Fraud The willful misrepresentation or nondisclosure of a material fact by a claimant for the purpose of obtaining benefits to which the individual is not entitled.

Client Service Representative (CSR) An ADP associate responsible for answering client questions and resolving client inquiries.

COBRA Consolidated Omnibus Budget Reconciliation Act of 1985. This Act requires that continuation of group insurance coverage be offered to covered persons who lose health or dental coverage due to a qualifying event as defined in the Act.

COBRA Qualifying Event An event that allows insurance coverage or an extension of insurance coverage for an employee, spouse or dependent. Such events may be marriage, birth/adoption/placement, loss of group health plan coverage, divorce/legal separation, death of the covered employee, loss of dependent’s eligibility for coverage, etc.

COD Court ordered deduction; any legal notice received ordering an employer to deduct monies from an employees paycheck to be paid directly to the court or another agency (child support payment, garnishments, etc.)

Collection Agency A third party responsible for collecting overdue debts

Combined Filing A filing which includes the liability and deposits for more than one tax type. For example, California requires combined State Income Tax (SIT), State Unemployment Insurance (SUI) and State Disability Insurance (SDI) deposits and filings. New York requires combined State Income Tax (SIT) and City Income Tax (CIT) deposits and filings.

Combined Wage Claim A claim filed in one State against wage credits earned in two or more States.

Combo Combined. Used in reference to two or more Tax Filing Service company codes that share an Employer Tax Identification Number (EIN).

Commission Compensation received by an employee for services performed. Commissions are paid based on a percentage of sales made or a fixed amount per sale.

Common Ownership When blood or marriage relates the owners, partners, officers, shareholders or previous owners of two or more organizations.

Common Pay Agent Refers to the Internal Revenue Service (IRS) rules that allow employers with multiple Federal Employer Identification Numbers (FEINs) to consolidate tax returns and tax payments under one FEIN. The purpose of the Common Pay Agent program is to simplify employer tax reporting through the consolidation of filings (i.e., Form 941).

Common Paymaster Refers to the Internal Revenue Service (IRS) rules that allow related corporations that employ the same individual to be considered a single employer for the purposes of calculating Social Security and Federal Unemployment Tax.

Common Rate See Joint Account

Common Rate Analysis See Joint Account Analysis

Company Code An identification code assigned to every ADP client to help en

Compensatory Time Paid time off granted to an employee for working extra hours. The Federal Wage-Hour Law places severe restrictions on the use of compensatory time to avoid paying overtime, although special exemptions are allowed for certain public sector employees (e.g., police officers and firefighters).

Complaint A written document filed in court in which the person initiating the action names the persons, allegations, and relief sought.

Compliance Referring to compliance with any federal, state or local laws regarding taxes and dealings with employees

Computation Date The date as of which employer's experience is measured for the purpose of determining contribution rates.

Consent Agreement Voluntary written admission of paternity or responsibility for support.

Consolidated Omnibus Budget Reconciliation Act of A law requiring organizations with 20 or more employees to offer continuation of group health benefits to certain former employees, retirees, spouses, and dependent children. The length of continuation coverage offered depends on the "qualifying event." (certain types of events that would cause, except for COBRA continuation coverage, an individual to lose health coverage). The type of qualifying event will determine who is entitled for continuation coverage and the required amount of time that the plan must offer the health coverage under COBRA. For example, in the event a covered employee voluntarily or involuntarily terminates employment for reason other than "gross misconduct" or reduces the number of hours worked (with loss of coverage), the covered employee, spouse, and dependent children will be entitled to continue coverage in the group health plan for up to 18 months. A covered spouse and dependent child(ren) are eligible to continue coverage for up to 36 months in the event of divorce, legal separation, or death of the covered employee, or the child(ren) no longer meets the requirements of a dependent child under the health plan.

Constructive Receipt The Internal Revenue Service (IRS) doctrine stating that wages generally are taxable and subject to employment tax withholding (e.g., Social Security, Medicare, Federal Income Tax, and Federal Unemployment Tax) when actually paid or when made available to employees without substantial limitation.

Continued Claim A claim filed by mail or in person for waiting period credit or payment for one or more weeks of unemployment.

Contribution - Employee In most states the employer contribution finances 100% of the Unemployment Insurance Fund. In a limited number of states, the employee is also liable for contributions through payroll withholding. Failure to withhold employee contributions as directed will result in employer liability for all monies not withheld. Employers withholding for employee contributions in non-contribution states may be subject to fines and criminal prosecution.

Contribution - Employer Payments to the state unemployment fund as taxes, including voluntary contributions and special assessments paid by subject employers. The contribution amount is determined by multiplying the employer taxable payroll by the assigned unemployment tax rate.

Contribution Rate See Tax Rate

Contribution Rate Notice See Tax Rate Notice

Contribution Report An employer's quarterly report of total and taxable wages, the amount of contribution due a State unemployment fund.

Contribution Report An employer report of total wages and taxable wages including a calculation of the contribution amount due to the state unemployment fund. The majority of states require quarterly report filing.

Conversion Representative This is a generic term for an ADP associate who assists with the conversion from a client's current HR or payroll system to ADP.

Correspondence Address The mailing address where ADP Tax Filing Service clients want to receive their Statement of Deposits and Filings.

Court-Ordered Support A mandatory support order, often paid to the court or a child support enforcement agency, that is identified by phrasing such as “order served”or “notice of order”

Covered Employer An employer that is subject to the provisions of the Employment Security Law. An employer achieves liability based on one or more of the following conditions: employing a minimum specified number of workers and/or duration of employment; the nature of the employment; the amount of wages paid for services in employment; the acquisition of a business; or voluntary election of coverage for non-mandated employers.

Covered Employment Generally, any person performing services for a company is an employee if the company can control what, when and how the job functions are to be done. Federal law defines these individuals as "common law" employees. If an employer-employee relationship exists, it does not matter what terminology the employer uses to describe the employees. Employees can include managers, supervisors and corporate officers. (Directors of a corporation, as well as officers of a corporation that perform no services or that are paid no wages, are usually not considered employees.) An employer must report and pay contributions on the wages of all of its employees. Employers should consult the laws of the states in which business is conducted to determine if employees' wages should be reported. States will at times have differing regulations than the FUTA guidelines.

Covered Wages Under FUTA, wages include all cash payments made to employees for services rendered, including salaries, commissions, vacation allowances, fees, bonuses, back pay and many fringe benefits. It does not matter in what form the payment is made, when it is made, or on what measurement of production it is based. Wages also include the cash value of remuneration paid other than cash, such as the reasonable value of food or lodging allowed to an employee as part of the employment relationship. Certain payments and benefits are considered exempt under FUTA, as an example, cafeteria plan contributions are only exempt in about half the states. Necessary business expenses incurred in connection with employment and reimbursed or advanced to employees (such as per diem allowances and traveling or moving expenses) are usually not considered taxable wages. For business expenses to be exempt from wages the employer must identify those payments on separate detailed records. If properly documented most states will consider such payments exempt, even if not specifically exempted by law or regulations.

CR See Credit.

Credit (CR) A negative amount applied against accumulated values. This usually refers to the credit an ADP client receives against impounded taxes, or a credit or refund due from a taxing agency for overpayment of taxes.

Credit Elect If taxes have been over-deposited in a quarter, some agencies allow the overpayment to be applied (credit elected) against future liabilities in a subsequent quarter.

Credit Reduction In states or territories with outstanding loans from the Federal Unemployment Trust Fund, employers are not entitled to the full credit for unemployment contributions paid to those states. Credit Reduction States and the applicable rates are published annually in Part 1, line 6 of Form 940 (Unemployment Annual Reconciliation). See also Federal Unemployment Tax (FUTA).

CSR See Client Service Representative.

Custodial Parent Person with legal custody and with whom the child lives; may be a parent,relative, or other individual

Custodial Parent Person with whom a child lives and who has legal custody. It may be a parent, relative, or other individual.

Custody The legal determination which establishes with whom a child shall live.