Recently, the Massachusetts Department of Revenue (DOR) released guidance on how to report wages paid under the state Paid Family and Medical Leave Law (PFML) for employers’ fourth quarter 2019 PFML return. This guidance was released to ensure covered employers can properly and timely file and remit contributions in advance of the quarterly deadline of January 31, 2020.
Beginning in January 2021, eligible Massachusetts employees will be entitled to receive:
- Up to 12 weeks of paid family leave related to the birth, adoption, or foster care placement of a child
- Up to 26 weeks of paid family leave in a benefit year to care for a family member who is a covered service member with a serious health condition
- Up to 12 weeks of paid family leave to care for a family member with a serious health condition
- Up to 20 weeks of paid medical leave per benefit year in accordance with the Massachusetts PFML program
The program is funded through a Massachusetts tax paid by Massachusetts employees, employers, and the self-employed. Unless an employer has applied for and received an exemption, Massachusetts employers will be required to file quarterly reports and remit quarterly contributions to help fund the program. Although PFML benefits will not be available until January 1, 2021, the Massachusetts Department of Family and Medical Leave (the administrator of the program) required employers to deduct payroll contributions beginning on October 1, 2019. The first deadline to file report wages and PFML contributions for the fourth quarter of 2019 is January 31, 2020.
Filing the Quarterly Report
Employers are required to submit quarterly reports and contributions electronically through MassTaxConnect. Upon filing, employers will be asked to provide the following information:
- Information about each employee or independent contractor included in the return
- The Social Security number or Individual Taxpayer Identification Number (ITIN) for each employee or independent contractor
- The first and last name of each employee or independent contractor
- The wages paid each employee or independent contractor
Employers can find informational videos and step-by-step instructions on the DOR website.
Additionally, in its recent guidance, the DOR provided the following clarifications to the reporting process:
- Employers should only report wages for the fourth quarter of 2019 and not actual 2019 year-to-date wages on the return. This is because contributions were not withheld for the first three quarters of 2019, so the Social Security annual wage cap should only be applied against fourth quarter wages. When submitting future returns, employers will be required to report the actual year-to-date wages in the appropriate box.
- If a company outsources W-2 payroll services to a third-party provider and handles reporting for independent contractors internally, there are some important rules to follow when filing returns. Essentially, the payroll service must file on behalf of W-2 employees before the company may file an amendment to the payroll service’s filing to report information on behalf of the covered independent contractors. Employers may want to communicate this information with their payroll provider to ensure the report is filed correctly.
In light of this new requirement under Massachusetts law, companies doing business in Massachusetts may want to determine whether reporting is required and, if so, begin calculating contributions and formulating a procedure for compliance. After this first filing due on January 31, 2020, all subsequent filings will be due on or before the last day of the month following a calendar quarter’s close.