Glossary Of Terms And Acronyms Flashcards
A set of criteria used by many states to determine the relationship of a worker to the organization for which services are performed. A worker meeting these criteria is considered an independent contractor under the state’s unemployment insurance law.
ABC Test
Also known as the one-day rule, it requires employers that accumulate a tax liability of $100,000 or more during a deposit period to deposit the withheld taxes within one banking day of the day the liability was incurred
Accelerated Deposit Rule
A financial institution, college or university, federal agency, state and local government, community-based nonprofit organization, or professional tac return preparer that operates under an agreement with the IRS to aid aliens in processing their requests for Individual Taxpayer Identification Numbers. They may also be referred to as “community based certified acceptance agents”
Acceptance Agents
The representation of assets, expenses, liabilities, and revenues in the general ledger, to which debit and credit entries are posted to record changes in the value of the this.
Account
An Employer’s business expense reimbursement plan that satisfies all IRS requirements regarding substantiation, business connection, and return of excess amounts in a reasonable period of time.
Accountable Plan
The period covered by an income statement (e.g., month, year); also known as a business cycle.
Accounting period
The recognition of assets, expenses, liabilities, or revenues after the cash value has been determined but before it has been transferred.
Accrual
Software available by online access from the Social Security Administration’s website that can be used to test electronic wage reports (Form W-2 and W-2c information) for proper formatting before submittal to the SSA.
AccuWage
The percentage of employer matching contributions and after-tax employee contributions made to an employee’s account in a 401(k) plan. The IRS uses this to determine whether the plan discriminates in favor of highly compensated employees.
Actual Contribution Percentage (ACP)
The percentage of wages deferred by employees participating in a salary reduction plan (e.g., 401(k) plan). The IRS uses this to determine whether the plan meets the agency’s nondiscrimination requirements.
Actual Deferral Percentage (ADP)
Accidental Death and Dismemberment Insurance
AD&D
A 0.9% tax that must be withheld by the employer from an employee’s wages when they exceed $200,000 in a calendar year, in addition to the basic Medicare tax rate of 1.45%. The employer does not have to pay an employer share on this amount.
Additional Medicare Tax
A form in the 94X series that allows employers to make interest-free adjustments to previously filed employment tax returns and to pay amounts owed or claim a credit or refund of amounts overpaid.
Adjusted Return
An entry made at the end of an accounting period to update or adjust an account before financial statements are prepared.
Adjusting Entry
Denotes regulations, interpretations, announcements, etc., issued by government agencies empowered to enforce laws, such as the Internal Revenue Service, the Department of Labor, the Social Security Administration, and the Equal Employment Opportunity Commission.
Administrative
Financial benefits provided by an employer to an employee to help with the child adoption process. Within certain limitations, it is excluded from federal income tax, though not social security or Medicare taxes.
Adoption Assistance
Payments of earned income credit during the year to employees who expect to be eligible for the credit. These payments were eliminated for wages paid during employment tax return periods beginning after December 31, 2010.
Advance Earned Income Credit (AEIC)
Popular name for health care reform legislation enacted in 2010, referring to the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act.
Affordable Care Act (ACA)
An e-filing system used by employers and insurance providers to file ACA information returns with IRS.
Affordable Care Act Information Returns (AIR) System
A deduction from an employee’s pay that does not reduce the employee’s taxable wages. It is taken out only after all applicable taxes and other deductions have been withheld (e.g., union dues, garnishments, charitable contributions).
After-tax Deduction
Federal Law that prohibits employment discrimination on the basis of an individual’s age (40 or older)
Age Discrimination in Employment Act of 1967 (ADEA)
An ALE that is a member of a controlled group of corporations; often used to refer to all ALEs.
ALE Member
A citizen of a country other than the U.S. or one of its territories or possessions
Alien
Federal law that created a second level of supplemental wage tax rates and stricter rules on the taxability of nonqualified deferred compensation.
American Jobs Creation Act of 2004 (AJCA)
Federal law designed to provide an economic stimulus, in part by providing a tax credit through reduced income tax withholding and a discounted premium for continued health insurance coverage for involuntarily terminated employees.
American Recovery and Reinvestment Act of 2009 (ARRA)
Federal law that made permanent the tax rates established by EGTRRA 2001, added a new maximum income tax bracket of 39.6% and retroactively reinstated the parity among qualified mass transit, van pooling, and parking fringe benefits from January 1, 2012 through December 31, 2013.
American Taxpayer Relief Act of 2012 (ATRA)
Federal law that broadly prohibits discrimination against individuals with disabilities who can perform the essential functions of a job with or without reasonable accommodation.
Americans with Disabilities Act of 1990 (ADA)
The Social Security Administration’s system of recording wages reported annually by employers on Forms W-2.
Annual Wage Reporting (AWR)
American Payroll Association
APA
An employer with at least 50 full-time and full-time equivalent employees that is required to provide affordable health insurance coverage at minimum value to its full-time employees under the Affordable Care Act.
Applicable Large Employer (ALE)
An outsourcing arrangement where the outsourcing company hosts each application at its location and the client gains access through the internet.
Application Service Provider (ASP)
A company that has been approved by the American Payroll Association to award Recertification Credit Hours (RCHs) for its payroll education curriculum.
Approved RCH Provider
Resources acquired by a business that are consumed by the business.
Assets
A review of a business’s records and procedures to determine their accuracy and completeness.
Audit
In general, a written agreement (entered into voluntarily) authorizing an employer to withhold and distribute a portion of an employee’s wages to a party designated by the employee (e.g., direct deposit, paycard, union dues, charitable contributions).
Authorization Agreement
A Federal Reserve Bank or private financial institution acting on behalf of an association operating a facility that serves as a clearinghouse for direct deposit transactions. Entries are received and transmitted by them under the rules of the association.
Automated Clearing House (ACH)
A cash award made to an employee that generally results from legal action to remedy a violation of federal or state wage-hour or employment discrimination laws.
Back Pay Award
Income tax withholding required from nonemployee compensation when the payee fails to furnish the payer with a taxpayer identification number or the payer is notified by the IRS that the payee’s TIN is incorrect.
Backup Withholding
The value of an account, as determined by calculating the difference between the debits and credits in the account.
Balance
A financial statement that presents a business’s financial position in terms of its assets, liabilities, and owner’s equity as of a certain date (generally the end of the company’s fiscal year but may be issued quarterly as well).
Balance Sheet
When dealing with unemployment compensation, it generally consists of the first 4 of the last 5 quarters immediately preceding the claimant’s benefit year.
Base Period
The amount is generally one of several criteria used in determining a claimant’s eligibility for unemployment compensation. (Earned during Base Period)
Base Period Wages
Processing data as a group, either to increase controls or processing efficency.
Batch Processing
The right of a business to direct and control the details and means by which a worker performs the work to be done.
Behavioral Control
An extra FUTA tax credit reduction that can apply in states in the fourth year of credit reduction (fifth year carrying a FUA loan balance). The added amount is basically designed to bring the five-year average state UI tax rate to at least 2.7%.
Benefit Cost Rate (BCR) Add-on
In the context of unemployment compensation, it is a type of experience rating system that bases an employer’s unemployment tax rate on the ratio of the employer’s benefit charges to its taxable payroll for a specific period of time.
Benefit Ratio
In the context of unemployment compensation, it is a type of experience rating system that bases an employer’s unemployment tax rate on the ratio of the employer’s benefit wages to its taxable payroll for a specific period of time.
Benefit Wage Ratio
In the context of unemployment compensation, an amount charged to an employer’s account when a former employee receives unemployment benefits. The amount is determined by the base period wages paid by that employer to the claimant.
Benefit Wages
In the context of unemployment compensation, the 52-week period beginning on the first day a claim for benefits is filed.
Benefit Year
Virtual currency that may be used to pay for various services, including wages paid by employer. It is treated as property for federal tax purposes.
Bitcoin
Bureau of Labor Statistics
BLS
Refers to actions taken in good faith, without pretense or fraud
Bona Fide
For Federal tax purposes, any day that is not a Saturday, Sunday or legal holiday in the District of Columbia.
Business day
The outsourcing of end-to-end business processes and functions, including their required support services.
Business Process Outsourcing (BPO)
Suite of electronic employer wage reporting and SSN verification options available through the Social Security Administration’s website.
Business Services Online (BSO)
A cents-per-mile figure issued annually by the IRS. Reimbursements for employee transportation expenses incurred while using their vehicles for business are not included in income up to the business standard mileage rate.
Business Standard Mileage Rate
U.S. Circuit Court of Appeals, generally preceded by a number identifying the circuit (e.g. 9th …)
CA
A plan that offers flexible benefits under IRC section 125. Employees choose their benefits from a “menu” of cash and benefits, some of which can be paid for with pretax deductions from wages.
Cafeteria Plan
The ability of a cafeteria plan to allow employees to bring up to $550 in salary reduction contributions to their health care flexible spending arrangement to the following year.
Carryover
An arrangement under a retirement plan that allows employees to either receive cash or have the employer contribute an equivalent amount to the plan.
Cash or Deferred Arrangement (CODA)
Elective deferrals by an employee to a defined contribution retirement plan, IRA, or heath savings account above any statutory or plan-mandated limit.
Catch-up Contributions
Chief Counsel Advice
CCA
A file maintained by an Automated Clearing House (ACH) that contains depository financial institution names, routing numbers, addresses of contact persons, settlement and delivery information, and output medium requested.
Central Information File (CIF)
If a Professional Employer Organization is certified by the IRS, during the life of a contract with a client, they will be treated as the employer (and no other person will be treated as the employer) and the relationship of the client and the Professional Employer Organization will be that of predecessor and successor employers. A certified Professional Employer Organization may assume liability for withholding and filing its clients’ employment taxes with respect to all wages paid by the Professional Employer Organization.
Certified Professional Employer Organization (CPEO)
Similar to the Consumer Price Index (a measure of the change in prices of certain basic goods and services), but this takes into account the effect of substitutions that consumers make in response to changes in relative prices. It is calculated by the BLS.
Chained Consumer Price Index (C-CPI)
Also known as Check 21 - it allows banks to use “substitute” checks and electronic check imaging in clearing paper checks, thus reducing greatly the amount of paper used in the check clearing process.
Check Clearing for the 21st Century Act
The process of withholding amounts from an employee’s compensation to satisfy an order from a court or a state child welfare administrative agency. The employer is responsible for withholding amounts and paying them over to the party named in the withholding order.
Child Support Withholding
IRS Publication 15, Employer’s Tax Guide. This publication contains the basic rules, guidelines, and instructions for withholding, depositing, reporting and paying federal employment taxes. Beginning in 2020, the percentage method and wage bracket method withholding tables, as well as the employer instructions on how to figure employee withholding, were moved to IRS Publication 15-T, Federal Income Tax Withholding Methods.
Circular E
A provision in an employment contract requiring that an employee return money or benefits received due to special circumstances or events.
Clawback
A method of computing where one computer is tied to another and each share a portion of the workload, with the main data storage being on the server.
Client/Server
In this environment, the client/employer uses applications hosted by a service provider on the internet to process payroll and stores its data on servers owned by the service provider.
Cloud computing
A worker who is an employee under the common law test
Common Law Employee
A test that measures the control and direction that an employer has the authority to exercise over a worker. Where the employer has the right to direct the worker as to how, where, and when the work will be completed, in addition to controlling the result of the work
Common Law Test
One of two or more related corporations that pays employees who work concurrently for the related corporations. Under this arrangement, the related corporations are treated as a single employer for social security, Medicare, and FUTA tax purposes.
Common Paymaster
All cash and noncash renumeration given to an employee for services performed for the employer.
Compensation
Paid time off granted to an employee for working extra hours. The Fair Labor Standards Act places severe restrictions on the use of this to avoid paying overtime, although special exemptions are allowed for public sector employees.
Compensatory Time
Working for more than one related corporation under a common paymaster arrangement.
Concurrent Employment
Federal omnibus legislation containing the Protecting Americans from Tax Hikes (PATH) Act of 2015
Consolidated Appropriations Act 2016
Federal law that requires employers with group health care coverage to offer continued coverage to separated employees and other qualifying beneficiaries.
Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA)
An IRS rule that considers wages to have been paid to an employee when the employee has access to the wages without substantial limitations or restrictions
Constructive Payment
Federal law that restricts the amount of an employee’s earnings that can be garnished to pay creditor debts, including child support.
Consumer Credit Protection Act (CCPA)
Federal government agency created by financial reform legislation in 2010 that has regulatory authority over direct deposit and electronic payroll cards under the Electronic Fund Transfer Act.
Consumer Financial Protection Bureau
A measure of the change in prices of certain basic goods and services (e.g., food, transportation, housing) developed and published by the BLS.
Consumer Price Index (CPI)
A group of key or highly compensated employees in a company whose proportion of benefits is limited under the qualification requirements of certain benefit plans (e.g. section 125 or 401(k) plans). Also, employers may not use the commuting valuation method for such employees when determining the value of their personal use of a company-provided vehicle.
Control Group
Federal law that prohibits anyone from inducing an employee working on a federally financed project to give back any part of the pay to which the employee is entitled under a federal contract.
Copeland ‘Anti-Kickback’ Act
Legislation providing COVID-19 related relief, including an employee retention credit taht was available for much of 2020 and was extended into 2021.
Coronavirus Aid, Relief, and Economic Security (CARES) Act
An adjustment of wages or benefit payments to account for changes in the cost of living, generally based on changes in the Consumer Price Index (CPI)
Cost-of-Living Adjustment (COLA)
For each law affecting payroll and human resources, this term defines those workers who are subject to the law
Covered Employees
For purposes of the extended leave provisions of the Family and Medical Leave Act, a current member of the U.S. military, and those on the temporary disability retired list, who have suffered a serious injury or illness while on active duty for which they are undergoing medical treatment, recuperation, or therapy, or veterans undergoing medical treatment, recuperation, or therapy for a serious injury or illness who served during the preceding five years.
Covered Servicemembers
Certified Public Accountant
CPA
Certified Payroll Professional
CPP
An accounting entry that increases liabilities and revenues and decreases assets and expenses.
Credit
A reduction in the credit an employer receives against FUTA tax owed for state unemployment taxes paid, where the state has not repaid a federal loan under the joint federal/state unemployment compensation program.
Credit Reduction
Management strategy that maps out deadlines that must be met to finish a project within the time allowed.
Critical Path
Child Support Enforcement Agency
CSEA
Bound volumes that were published annually by the IRS and contained information printed in that year’s weekly Internal Revenue Bulletins
Cumulative Bulletin (CB)
A method of presenting payroll data using easy-to-comprehend charts and graphs showing current state, trend analysis, and future projections.
Dashboard
Federal law requiring Labor Secretary to set prevailing wage rates for employees on federally financed construction contracts.
Davis-Bacon Act
Anything that is too insignificant to merit legal scrutiny, such as a fringe benefit that is provided occasionally and is too small to justify accounting for or recording it. This does not apply to cash or cash equivalents except in very specific instances such as supper money.
De Minimis
A code received by an employer using the Social Security Number Verification Service indicating whether the person associated with the SSN submitted for verification is deceased or not deceased.
Death Indicator
An accounting entry that increases assets and expenses and decreases liabilities and revenues
Debit
An amount subtracted from an employee’s gross pay to reach net pay, or an amount allowed to taxpayers as an offset against income.
Deduction
Safe-harbor rules under which IRS requirements regarding the substantiation of amounts spent on employee business expenses are considered to have been met (e.g., per diem allowances).
Deemed Substantiation
In general, the postponement of a wage payment to a future date. Usually describes a portion of wages set aside by an employer for an employee and put into a retirement plan on a pretax basis.
Deferred Compensation
A retirement plan that uses a formula (generally based on an employee’s salary and length of service) to calculate an employee’s retirement benefits and is not funded by employee contributions to the plan.
Defined Benefit Plan
A retirement plan with benefits determined by the amount in an employee’s account at the time of retirement. The account may be funded by contributions from both the employer and the employee.
Defined Contribution Plan
An employer plan providing dependent care services or reimbursements for such services.
Dependent Care Assistance Program
Term life insurance that gives an employee death benefits should the employee’s spouse or other dependents die
Dependent Group-Term Life Insurance
A portion of an employee’s elective deferrals that the employee elects to contribute to a Roth IRA rather than to the employee’s 401(k), 403(b), or 457(b) plan.
Designated Roth Contribution
Payments made by an employer to an employee who is serving in the U.S. armed forces to make up the difference between the employee’s military pay and his or her regular wages.
Differential Military Pay
The electronic transfer of an employee’s net pay directly into financial institution accounts designated by the employee, thus avoiding the need for a paycheck.
Direct Deposit
A plan for keeping the payroll function operational after a shutdown of the system is caused by a natural or man-made disaster.
Disaster Recovery
In the context of employee benefits, favorable treatment of highly compensated employees under an employer’s plan.
Discrimination
Amounts paid to employees who are terminated from employment, also known as payments in lieu of notice, termination pay, or severance pay.
Dismissal Pay
That part of an employee’s earnings remaining after deductions required by law (e.g., taxes). It is used to determine the amount of an employee’s pay that is subject to a garnishment, attachment, or child support withholding order.
Disposable Earnings
Defense of Marriage Act
DOMA
Health insurance and other benefits provided to the same-sex partner of an employee by the employee’s employer.
Domestic Partner Benefit
The act of putting on and taking off clothing, uniforms, protective wear, etc. at work, which may or may not be part of the employee’s workday depending on how indispensable it is to the employee’s principal work activity.
Donning & Doffing
The recording of equal debits and credits for every financial transaction
Double-Entry Accounting
The earliest age at which social security retirement benefits can be received - currently age 62. Individual company retirement plans may provide for benefits at an earlier age.
Early Retirement Age
A tax credit that is available to low-income employees. It may be taken when the employee files his or her individual tax return.
Earned Income Credit (EIC)
Significant tax cut legislation enacted in 2001 that reduced income tax rates and increased pension plan elective deferrals.
Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA)
A test used by the Wage and Hour Division in deciding whether a worker is an employee or independent contractor that takes into account whether the worker is “economically dependent” on the business hiring the worker.
Economic Realities Test
Electronic Data Interchange
EDI
An employer plan providing for payment or reimbursement of an employee’s educational expenses.
Educational Assistance Program
The Employer Information Report that employers provide to the Equal Employment Opportunity Commission to help the EEOC combat unlawful employment discrimination.
EEO-1 Report
Equal Employment Opportunity Commission. This federal agency is responsible for administering and enforcing the Civil Rights Act of 1964, the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act of 1990, and the Equal Pay Act of 1963.
EEOC
An electronic tax payment method that allows an employer to access the Electronic Federal Tax Payment System directly by computer or phone to report its employment tax deposit information
EFTPS-Direct
An electronic tax payment option that allows employers to deposit taxes, monitor the status of current deposits, and check their recent payment history over the internet.
EFTPS-Online
An Electronic pyament method where an employer instructs its financial institution to originate a federal tax deposit through the ACH system to the U.S. Treasury
EFTPS-Through a Financial Institution
Sets of specifications for filing Forms W-2 and W-2c electronically with the Social Security Administration
EFW2, EFW2C
The amount of pretax dollars that an employee chooses to have the employer contribute to a qualified deferral compensation plan (e.g., a 401(k) plan) in the employee’s behalf, also known as pretax contributions or employer contributions
Elective Deferral
System that allows employers to make federal tax deposits electronically through the ACH network.
Electronic Federal Tax Payment System (EFTPS)
The process of filing tax and information returns directly from one computer to another.
Electronic Filing
The transfer of money electronically from an account in one financial institution to an account in another financial institution
Electronic Funds Transfer (EFT)
Electronic payment method that is available for payment of the balance due on employment tax returns, but not for payroll tax deposits.
Electronic Funds Withdrawal (EFW)
An order to withhold child support from an employee’s wages that is received by the employer electronically.
Electronic Income Withholding Order (e-IWO)
A substitute for a paper signature that may carry the same legal effect in the payroll context; it may be accomplished using technologies such as personal identification numbers, biometrics, “click-to-accept” boxes, and electronic pads.
Electronic Signature
A process by which an employer’s data and processing applications are duplicated at a remote site to make it easier to continue payroll processing in the event of a disaster.
Electronic Vaulting
A non-safe harbor method providing limited relief from distribution restrictions for deferred compensation plans with an automatic enrollment feature.
Eligible Automatic Contribution Arrangement (EACA)
An individual who performs services for another individual or an organization in return for compensation.
Employee
Amounts spent by an employee for travel, lodging, meals, etc., while on the employer’s business. Reimbursements for such expenses may be excluded from income if they are properly accounted for.
Employee Business Expenses
Federal law regulating the operation of private sector pension and benefit plans
Employee Retirement Income Security Act of 1974 (ERISA)
An application that gives an employee access to personal and company data and allows the employee to review, print out, and/or update certain portions of that data. It can be accomplished by phone, at a centralized computer workstation, or on individual personal computers.
Employee Self-Service.
A stock bonus plan or combined stock bonus and money purchase plan designed to invest primarily in employer’s stock.
Employee Stock Ownership Plan (ESOP)
An employer plan under which all employees are given the opportunity to buy the employer’s stock at a discount, subject to strict limitations.
Employee Stock Purchase Plan (ESPP)
The Federal Form W-4 or an equivalent state or local form on which the employee indicates the adjustments to withholding he or she may claim. Prior to 2020, this was accomplished through an allowance based system, which is still used on some state withholding forms. The form is used by the employer to determine the amount of federal, state, and local income taxes to withhold from the employee’s compensation.
Employee’s Withholding Certificate
An individual or organization that hires individuals to perform services in return for compensation, and that has the authority to control and direct the work of those individuals as part of the relationship.
Employer
A letter sent by the SSA to an employer that informs the employer of employee names and social security numbers on Forms W-2 sent to SSA by the employer that do not match SSA’s database.
Employer Correction Request Notice (EDCOR)
The Employer’s account number with the Internal Revenue Service, it consists of nine digits (00-00000000)
Employer Identification Number (EIN)
The obligation of an Applicable Large Employer to provide health insurance coverage to its full-time employees and to share the cost of the coverage so that it is affordable for employees.
Employer Shared Responsibility
Health coverage provided to employees by their employer, the value of which must be reported on the employee’s Form W-2
Employer-Sponsored Health Coverage
An IRS program that allows employers with less than $1,000 in annual employment tax liability to file an annual employment tax return rather than quarterly returns, and to pay their employment taxes with the return rather than making periodic deposits.
Employer’s Annual Federal Tax Program (EAFTP)
IRS Publication 15-A. This publication provides more detailed information for employers than Circular E (Publication 15), especially in the areas of employee status determinations and sick pay taxation and reporting.
Employer’s Supplemental Tax Guide
IRS Publication 15-B. This publication provides detailed information for employers on fringe benefits that are excluded from employee’s income, as well as the valuation, taxation, and reporting requirements for taxable fringe benefits.
Employer’s Tax Guide to Fringe Benefits
The IRS’s electronic filing system for Forms 940, 941 and 944
Employment Tax e-file System
The process of determining whether a newly hired employee is authorized to work in the United States under the Immigration Reform and Control Act.
Employment Verification
Employer’s Tip Reporting Alternative Commitment
emTRAC
A test for determining whether an employer’s entire operation is covered by the Fair Labor Standards Act. It is based on the employees’ involvement in interstate commerce and the employer’s annual volume of revenue
Enterprise Coverage
A federal law requiring equal pay for men and women performing work requiring equal skill, effort, and responsibility under similar working conditions. It was made part of the FLSA in 1963.
Equal Pay Act (EPA)
In the context of payroll, the turning over of unclaimed wages to the state after a period of time determined by state law.
Escheat
Electronic Tax Application
ETA
A web-based system through which employers can match information provided by new employees on Form I-9 against information contained in the SSA’s and USCIS’s data bases to verify the employees’ employment eligibility
E-Verify
An online tool from USCIS that allows individuals to check their employment eligibility status, which gives them the chance to identity data inaccuracies and get them corrected before seeking employment.
E-Verify Self Check
The amount of an employee’s deferred compensation that exceeds the IRS’s annual contribution limit
Excess Deferral
While this term can refer to anyone not covered as an employee under a certain law, it generally means those employees that the minimum wage, overtime pay, and certain recordkeeping requirements of the Fair Labor Standards Act do not apply.
Exempt Employee
The price an employee pays for a stock when a stock option granted by an employer to an employee is exercised by the employee.
Exercise Price
For U.S. payroll purposes, a U.S. Citizen or resident alien who lives and works outside the U.S.
Expatriate
In the context of unemployment compensation, it is the employer’s past record of unemployment claims activity. This past record can then be used to determine the employer’s unemployment tax rate (i.e., the higher the turnover rate, the higher the tax rate).
Experience Rating
Unemployment benefits paid beyond the normal 20 or 26 weeks allowed by most states (authorized by federal legislation)
Extended Benefits
An Audit of an organization’s financial statements by a disinterested third party (e.g., an outside accountant or accounting firm)
External Audit
Federal law regulating such areas as minimum wage overtime pay and child labor for employers and employees covered by the law.
Fair Labor Standards Act of 1938 (FLSA)
Legislation that required certain employers to provide emergency paid sick leave and expanded family and medical leave for certain COVID-19 related reasons. The requirement to provide the leave expired at the end of 2020, but the tax credits for providing the leave were extended for employers that voluntarily provided the leave in the first quarter of 2021.
Families First Coronavirus Response Act (FFCRA)
Law guaranteeing 12 weeks’ unpaid leave to most employees to care for newborn or newly adopted children, or to deal with a serious illness or injury suffered by the employee or an ailing child, spouse, or parent of the employee.
Family and Medical Leave Act of 1993 (FMLA)
Fixed and variable rate mileage allowance
FAVR
IRS Publication 15-T. This publication includes the percentage method and wage bracket method withholding tables, the amount to add to a nonresident alien employee’s wages for figuring income tax withholding, and the employer instructions on how to figure employee withholding.
Federal Income Tax Withholding Methods
A same-day federal tax payment mechanism for business tax filers and payroll processors using their financial institutions. This works in conjunction with the Electronic Federal Tax Payment System (EFTPS)
Federal Tax Collection Service (FTCS)
A federal government funding source that states may borrow from to pay unemployment insurance benefits when their individual state funds have been emptied, generally during periods of economic recession. If states have these loans outstanding for two years, employers in those states can lose some of the credits they get against FUTA taxes for paying their state UI taxes on time.
Federal Unemployment Account (FUA)
Federal Insurance Contributions Act. It also describes the combined taxes levied for social security and Medicare
FICA
Written advice to IRS field agents and examiners from the IRS Chief Counsel’s office to guide them in handling particular factual situations.
Field Service Advice (FSA)
The IRS’s system for filing information returns (e.g., Forms 1099-MISC) electronically.
Filing Information Returns Electronically (FIRE)
Group that sets the standards for sound financial management.
Financial Accounting Standards Board (FASB)
The right of a business to direct and control the economic aspects of a worker’s job.
Financial Control
Reports that summarize a business’s financial position and operating results (comprised of a balance sheet, income statement, and statement of cash flow).
Financial Statements
Federal Income Tax
FIT
Federal Income Tax Withholding, FIT withheld from and employee’s wages when they are paid.
FITW
The option to choose from a menu of benefits offered by an employer
Flexible Benefits
An arrangement that allows an employee to have pretax dollars deducted from wages and put into an account to pay for health insurance deductibles and copayments and dependent care assistance (separate accounts for medical and dependent care).
Flexible Spending Arrangement (FSA)
