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FPC CERTIFICATION TERMS
2015 GLOSSARY
459
Accounting
Undergraduate 1
08/09/2015
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Term
218 agreement
 Definition
An agreement between a state or local government employer and the state social security agency under which the employees are subject to social security and Medicare coverage.
Term
401(k) plan
 Definition
A cash or deferred arrangement (CODA) that allows employees to authorize their employer to place pretax dollars in a retirement plan that invests the money. The contributions (including those matched by the employer) and any earnings on them are not subject to federal income tax (most state income taxes also) until they are withdrawn.
Term
403(b) annuity
 Definition
An annuity or mutual fund that provides retirement income for employees of public schools and certain tax-exempt organizations.
Term
409A
 Definition
Contains requirements that a nonqualified deferred compensation plan must meet to have employer contributions and employee deferrals excluded from income.
Term
457(b) plan
 Definition
An annuity or mutual fund that provides retirement income for employees of public-sector employers (e.g., state and local governments).
Term
Account
 Definition
A record of assets, expenses, liabilities, equity and revenues in the general ledger, to which debit and credit entries are posted to record changes in the value of the account.
Term
Accountable plan
 Definition
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.
Term
Accounting period
 Definition
The period covered by an income statement (e.g., month, year); also known as the business cycle.
Term
Accrual
 Definition
The recognition of assets, expenses, liabilities, or revenues in the accounting period that the transaction has occurred.
Term
ACH credit entry
 Definition
A transaction in which a taxpayer instructs its financial institution to originate a federal tax deposit through the ACH system to the appropriate Treasury account. Also known as EFTPS-Through a Financial Institution.
Term
ACH debit entry
 Definition
A transaction in which an employer's Financial Agent, after receiving instructions from the employer, instructs the employer's financial institution to withdraw funds from the employer's account for a federal tax deposit and to route the deposit to the appropriate Treasury account through the ACH system. Also known as EFTPS-Direct.
Term
ACH
 Definition
Automated Clearing House. 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 or other payment transactions; entries are received and transmitted by the ACH under the rules of the association.
Term
Actual deferral percentage (ADP)
 Definition
The percentage of wages deferred by employees participating in a salary reduction plan (e.g., 401(k) plan). The IRS uses the ADP to determine whether the plan meets the agency's nondiscrimination requirements.
Term
AD&D
 Definition
Accidental death and dismemberment insurance.
Term
ADA
 Definition
Americans with Disabilities Act of 1990.
Term
ADEA
 Definition
Age Discrimination in Employment Act of 1967.
Term
Adoption assistance
 Definition
A benefit provided by an employer to an employee to assist the child adoption process. The benefit is excluded from federal income tax withholding, though not social security and Medicare taxes.
Term
ADP
 Definition
Actual deferral percentage calculation, part of a 401(k) plan's discrimination testing.
Term
After-tax deduction
 Definition
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).
Term
Age Discrimination in Employment Act of 1967 (ADEA)
 Definition
Federal law that prohibits employment discrimination on the basis of an individual's age (40 or older).
Term
Aggregate method
 Definition
Method of withholding federal income tax from supplemental wages in which the supplemental wage payment is combined with the regular wages paid during the most recent or current payroll period; after calculating withholding on the total amount using the wage-bracket or percentage method, the amount already withheld from the last wage payment is subtracted to reach the amount that must be withheld from the supplemental wage payment.
Term
Alien
 Definition
A citizen of a country other than the U.S. or one of its territories or possessions.
Term
Allowances
 Definition
The number of withholding allowances that the employee claims on Form W-4. The number of allowances multiplied by a value set by the IRS determines the value of the employee's allowances when calculating federal income tax.
Term
American Payroll Association
 Definition
The premier professional society for Payroll Professionals in the United States providing education, support and recognition for practitioners in the payroll industry.
Term
Americans with Disabilities Act of 1990 (ADA)
 Definition
Federal law that broadly prohibits discrimination against individuals with disabilities who can perform the essential functions of a job with or without reasonable accommodation.
Term
Annual Wage Reporting (AWR)
 Definition
The Social Security Administration's system of recording wages reported annually by employers on Forms W-2.
Term
APA
 Definition
American Payroll Association.
Term
ASP
 Definition
Application Service Provider
Term
Assets
 Definition
Resources acquired by a business that are consumed by the business.
Term
Assignment
 Definition
See "Wage assignment."
Term
ATM
 Definition
Automated teller machine
Term
Attachment
 Definition
See "Wage attachment."
Term
Audit trails
 Definition
Tracks that identify how data was entered into the company's records.
Term
Audit
 Definition
A review of a business's records and procedures to determine their accuracy and completeness.
Term
Authorization agreement
 Definition
In general, an agreement that may be written or electronic (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, union dues).
Term
Automated Clearing House (ACH)
 Definition
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 the ACH under the rules of the association.
Term
Awards
 Definition
An item of value provided to an employee for exceptional services. The value is generally included in the employee's income.
Term
AWR
 Definition
The Social Security Administration’s Annual Wage Reporting program.
Term
Back-pay award
 Definition
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.
Term
Backup withholding
 Definition
Income tax withholding required from nonemployee compensation when the payee fails to furnish the payer with a Taxpayer Identification Number (TIN) or the payer is notified by the IRS that the payee's TIN is incorrect.
Term
Balance sheet
 Definition
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 accounting periods).
Term
Balance
 Definition
The value of an account as determined by calculating the difference between the debits and credits in the account.
Term
Batch control
 Definition
Control that is designed to ensure that a batch of data has been entered successfully.
Term
Batch processing
 Definition
Processing data as a group, either to increase controls or processing efficiency.
Term
Batch
 Definition
Sample or limited amount of all of the data being processed.
Term
Behavioral control
 Definition
The right of a business to direct and control the details and means by which a worker performs the work to be done.
Term
Biweekly
 Definition
Once every two weeks. The most common payroll frequency.
Term
BLS
 Definition
Bureau of Labor Statistics.
Term
Bona fide
 Definition
Refers to actions taken in good faith, without pretense or fraud.
Term
Bonus
 Definition
A cash payment to an employee for excellent services.
Term
BPO
 Definition
Business Process Outsourcing
Term
BSO
 Definition
Business Services Online, the Social Security Administration's employer portal for filing Forms W-2 and the use of the Social Security Number Verification System.
Term
Business expense
 Definition
Amounts spent by an employee for travel, lodging, meals, etc., while on the employer's business. Reimbursements for such expenses are excluded from income when paid under an accountable plan. Reimbursements for such expenses are included in income when paid under a nonaccountable plan.
Term
Cafeteria plan
 Definition
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.
Term
Cash or deferred arrangement (CODA)
 Definition
An arrangement under a retirement plan that allows employees to either receive cash or have the employer contribute an equivalent amount to the plan.
Term
Catch-up Contributions
 Definition
Allowed elective deferrals by an employee to a defined contribution retirement plan above the statutory or plan mandated limit made by employees 50 years and older.
Term
CB
 Definition
Cumulative Bulletin. The annual publication of the IRS' Internal Revenue Bulletin.
Term
CCPA
 Definition
Consumer Credit Protection Act.
Term
Central information file (CIF)
 Definition
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.
Term
Centralized Support Collection
 Definition
The welfare reform law passed in 1996 requires all states to implement procedures allowing employers to send many of the child support payments they withhold from workers' pay to a centralized location within their state, also known as state disbursement units.
Term
Chart of accounts
 Definition
Lists each account by a name and an identification number; the numbering scheme is designed to identify the type of account.
Term
Child support withholding
 Definition
The process of withholding amounts from an employee's compensation to satisfy a child support order from a court or a 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.
Term
Circular E
 Definition
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.
Term
Client/server
 Definition
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.
Term
COBRA
 Definition
Consolidated Omnibus Budget Reconciliation Act of 1985 that provides the ability to continue participating in an employer’s health insurance plan after employment ends.
Term
CODA
 Definition
Cash or deferred arrangement. An arrangement under a retirement plan that allows employees to either receive cash or have their employer contribute an equivalent amount to a qualified retirement plan.
Term
COLA
 Definition
Cost-of-Living Adjustment.
Term
Commission
 Definition
Percentage of sales, collections, etc., paid to an employee.
Term
Common law employee
 Definition
A worker who is an employee under the common law test.
Term
Common law test
 Definition
A test that measures the right to 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, the worker is a common law employee.
Term
Common paymaster
 Definition
Employees who work concurrently for one or more related corporations that are treated as a single employer for social security, Medicare, and FUTA taxes.
Term
Communications protocols
 Definition
Software parameters and standards that control the transfer of information from one computer to another.
Term
Company vehicle fringe benefit
 Definition
The value of the use of the company vehicle by the employee. When the employee documents the business use of the vehicle, the value is excluded from income. When the employee fails to document the business use of the vehicle, the value is included in income.
Term
Compensation
 Definition
All cash and noncash remuneration provided to an employee for services performed for the employer.
Term
Compensatory time
 Definition
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 public-sector employees.
Term
Concurrent employment
 Definition
Working for more than one related corporation under a common paymaster arrangement.
Term
Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA)
 Definition
Federal law that requires employers with group health-care coverage to offer continued coverage to separated employees and other qualifying beneficiaries and Medicare-only taxation of certain state and local governmental employees.
Term
Constructive payment
 Definition
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.
Term
Constructive receipt
 Definition
An IRS rule that considers wages to be received by an employee when the employee has access to the wages without substantial limitation or restriction.
Term
Consumer Credit Protection Act (CCPA)
 Definition
Federal law that restricts the amount of an employee's earnings that can be garnished to pay creditor debts, including child support.
Term
Consumer Price Index (CPI)
 Definition
A measure of the change in prices of certain basic goods and services (e.g., food, transportation, housing) developed and published by the Bureau of Labor Statistics (BLS).
Term
Control group
 Definition
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.
Term
Cost-of-Living Adjustment (COLA)
 Definition
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).
Term
Cost-of-Living Index
 Definition
See "Consumer Price Index."
Term
Covered employees
 Definition
For each law affecting payroll and human resources, this term defines those workers who are subject to the law.
Term
CPA
 Definition
Certified Public Accountant.
Term
CPI
 Definition
Consumer Price Index.
Term
CPP
 Definition
Certified Payroll Professional.
Term
Credit reduction
 Definition
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.
Term
Credit
 Definition
An accounting entry that increases liabilities and revenues and decreases assets and expenses.
Term
Critical path
 Definition
Management strategy that maps out deadlines that must be met to finish a project within the time allowed.
Term
Cumulative Bulletin (CB)
 Definition
Bound volumes published annually by the IRS that contain information printed in that year's weekly Internal Revenue Bulletin.
Term
Customer service
 Definition
In a payroll environment, customer service consists of reliability, responsiveness, assurance, empathy, and tangibles.
Term
DCAP
 Definition
Dependent care assistance program
Term
De minimis fringe benefit
 Definition
An item provided infrequently by an employer to an employee that is of small value. De minimis fringe benefits are never cash or cash equivalents.
Term
De minimis
 Definition
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.
Term
Debit
 Definition
An accounting entry that increases assets and expenses and decreases liabilities and revenues.
Term
Deduction
 Definition
An amount subtracted from an employee's gross pay to reach net pay, or an amount allowed to taxpayers as an offset against income.
Term
Deemed substantiation
 Definition
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).
Term
Deferred compensation
 Definition
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.
Term
Defined benefit plan
 Definition
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.
Term
Defined contribution plan
 Definition
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.
Term
Dependent care assistance program (DCAP)
 Definition
An employer plan providing dependent care services or reimbursement for such services.
Term
Dependent care assistance
 Definition
The value of employer-provided child care assistance allowing the employee to work.
Term
Dependent group-term life insurance
 Definition
Term life insurance that gives an employee death benefits should the employee's spouse or other dependents die.
Term
Direct deposit
 Definition
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.
Term
Disability
 Definition
Payments made to an employee for their extended absence from work due to a non-job-related accident or illness.
Term
Disaster recovery
 Definition
A plan for keeping the payroll function operational after a shutdown of the business, typically caused by a natural or manmade disaster.
Term
Discretionary bonus
 Definition
Bonus paid for services performed. In order to be considered discretionary, the bonus cannot be paid because of a promise made in advance, a contract, or another agreement.
Term
Discrimination
 Definition
In the context of employee benefits, favorable treatment of highly compensated employees under an employer's plan.
Term
Dismissal pay
 Definition
Amounts paid to employees who are terminated from employment, also known as payments in lieu of notice, termination pay, or severance pay.
Term
Disposable earnings
 Definition
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.
Term
Disqualifying disposition
 Definition
When an employee sells stock from an incentive or statutory stock option before the expiration of the qualified holding period.
Term
Double-entry accounting
 Definition
The recording of equal debits and credits for every financial transaction.
Term
Early retirement age
 Definition
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 retirement age.
Term
Earned Income Credit (EIC)
 Definition
A tax credit that is available to low-income employees. It may be taken when the employee files his or her individual tax return.
Term
Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA)
 Definition
The act containing comprehensive tax rate and pension plan changes.
Term
EDT
 Definition
Electronic Data Transfer
Term
Educational assistance program
 Definition
A plan in which amounts are paid to assist an employee with their education. Up to $5,250 can be provided and the amount is excluded from income or, if the courses taken are job-related, the entire amount is excluded from income under IRC Section 127. IRC Section 127 is scheduled to expire on December 31, 2012.
Term
EEOC
 Definition
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.
Term
EFT
 Definition
Electronic Funds Transfer. The transfer of money electronically from an account in one financial institution to an account in another financial institution. (See direct deposit and payroll cards.)
Term
EFTPS
 Definition
Electronic Federal Tax Payment System. Allows employers to make federal tax deposits electronically through the ACH network.
Term
EFTPS—Direct
 Definition
Electronic Federal Tax Payment System—Direct. A method where an electronic tax deposit is initiated by contacting the IRS to initiate the transaction.
Term
EFTPS—Through a Financial Institution
 Definition
A method where an electronic tax deposit is initiated by contacting an authorized financial institution. The financial institution and the treasury financial agent (TFA) process the transaction.
Term
EGTRRA
 Definition
Economic Growth and Tax Relief Reconciliation Act of 2001
Term
EIC
 Definition
Earned Income Credit.
Term
EIN
 Definition
Employer Identification Number.
Term
Elective deferral
 Definition
The amount of pretax dollars that an employee chooses to have the employer contribute to a qualified deferred compensation plan (e.g., a 401(k) plan) on the employee's behalf, also known as pretax contributions or employer contributions.
Term
Electronic Federal Tax Payment System
 Definition
System that allows employers to make federal tax deposits electronically through the ACH network. (EFTPS)
Term
Electronic Filing Specifications
 Definition
Set of specifications for filing Forms W-2 and W-2c with the Social Security Administration electronically.
Term
Electronic filing
 Definition
The process of filing tax and information returns directly from one computer to another.
Term
Electronic Funds Transfer (EFT)
 Definition
The transfer of money electronically from an account in one financial institution to an account in another financial institution (see "Direct deposit" and “Payroll Cards”) or the transfer of funds to deposit taxes (see EFTPS).
Term
Electronic Tax Application (ETA)
 Definition
The term for the same-day settlement procedures for electronic tax deposits made through the Electronic Federal Tax Payment System.
Term
Employee business expenses
 Definition
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.
Term
Employee discounts
 Definition
Discounts for the purchase of goods or services that an employee receives when buying goods or services from their employer. When the purchase of services is discounted 20% or less, the discount is not taxable. When the purchase of goods is discounted by the gross profit percentage or less, the discount is not taxable.
Term
Employee Retirement Income Security Act of 1974 (ERISA)
 Definition
Federal law regulating the operation of private-sector pension and benefit plans.
Term
Employee
 Definition
An individual who performs services for another individual or an organization in return for compensation. See also "Common law employee" and "Covered employees."
Term
Employee's Withholding Allowance Certificate
 Definition
The federal Form W-4 or an equivalent state or local form on which the employee states the number of withholding allowances he or she claims. The form is used by the employer to determine the amount of federal income tax to withhold from the employee's compensation.
Term
Employer Identification Number (EIN)
 Definition
The employer's account number with the Internal Revenue Service. It consists of nine digits (00-0000000).
Term
Employer
 Definition
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 employer-employee relationship.
Term
Employer's Supplemental Tax Guide
 Definition
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 fringe benefit taxation and reporting.
Term
Employment verification
 Definition
The process of determining whether a newly hired employee is authorized to work in the United States under the Immigration Reform and Control Act.
Term
Enterprise coverage
 Definition
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.
Term
Enterprise-wide solution
 Definition
When one vendor supplies all of a company's software.
Term
EPA
 Definition
Equal Pay Act.
Term
Equal Pay Act (EPA)
 Definition
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.
Term
Equity
 Definition
An owner's investment in a company, i.e., the company's net worth.
Term
ERISA
 Definition
Employee Retirement Income Security Act of 1974.
Term
Escheat
 Definition
In the context of payroll, the turning over of unclaimed wages to the state after a period of time determined by state law.
Term
ETA
 Definition
Electronic Tax Application.
Term
Excess deferral
 Definition
The amount of an employee's deferred compensation that exceeds the IRS's annual contribution limit.
Term
Excise tax
 Definition
Tax imposed on a specific transaction.
Term
Exempt employees
 Definition
While this term can refer to anyone not covered as an employee under a certain law, it generally means those employees who are exempt from the minimum wage and overtime pay and certain record-keeping requirements of the Federal Wage-Hour Law.
Term
Exempt
 Definition
If an employee claims exempt on his or her Form W-4, the employer does not have to withhold federal income tax from the employee's wages.
Term
Expatriate
 Definition
For U.S. payroll purposes, a U.S. citizen or resident alien who lives and works outside the U.S.
Term
Expense account
 Definition
Shows costs for goods and services consumed by the company during the accounting period.
Term
External audit
 Definition
An audit of an organization's financial statements by a disinterested third party (e.g., an outside accountant or accounting firm).
Term
Fair Labor Standards Act (FLSA)
 Definition
See "Federal Wage-Hour Law."
Term
Fair market value
 Definition
Used to determine the value of noncash, employer-provided benefits for payroll tax purposes, or the value of facilities provided to employees in lieu of wages.
Term
Family and Medical Leave Act of 1993 (FMLA)
 Definition
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.
Term
FASB
 Definition
Financial Accounting Standards Board.
Term
FAVR
 Definition
Fixed and variable rate mileage allowance.
Term
Federal income tax withholding (FITW)
 Definition
FIT withheld from employees' wages or paid by the employer.
Term
Federal Insurance Contributions Act (FICA)
 Definition
The law that created the social security program and requires social security and Medicare tax withholding.
Term
Federal Unemployment Tax Act (FUTA)
 Definition
Requires employers to pay a certain percentage of their employees' wages (up to a maximum wage limit) as a payroll tax to help fund unemployment compensation benefits for separated employees.
Term
Federal Wage-Hour Law
 Definition
The Fair Labor Standards Act of 1938 (FLSA), as amended. It regulates such areas as minimum wage, overtime pay, and child labor for employers and employees covered by the law.
Term
Fedwire
 Definition
Electronic funds transfer system owned and operated by the Federal Reserve Banks. It serves as a same-day settlement procedure for electronic federal tax depositors.
Term
FICA
 Definition
Federal Insurance Contributions Act. It also describes the combined taxes levied for social security and Medicare.
Term
Filing status
 Definition
Marital status of an employee for withholding purposes.
Term
Financial Accounting Standards Board (FASB)
 Definition
Group that sets the standards for accounting practices.
Term
Financial control
 Definition
The right of a business to direct and control the economic aspects of a worker's job.
Term
Financial statements
 Definition
Reports that summarize a business's financial position and operating results (made up of a balance sheet, an income statement, and a statement of cash flow).
Term
FIRE
 Definition
The IRS Filing Information Returns Electronically (FIRE) system.
Term
FIT
 Definition
Federal income tax.
Term
FITW
 Definition
Federal income tax withholding. FIT withheld from an employee's wages when they are paid.
Term
Flat rate withholding
 Definition
See "Supplemental wages."
Term
Flexible benefits
 Definition
The option to choose from a menu of benefits offered by an employer. See "Cafeteria plan."
Term
Flexible Spending Arrangement (FSA)
 Definition
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 FSAs).
Term
FLSA
 Definition
Fair Labor Standards Act (see "Federal Wage-Hour Law").
Term
Fluctuating workweek
 Definition
An arrangement between an employer and a nonexempt employee to pay the employee a fixed weekly salary even though the employee's hours may vary from week to week.
Term
FMLA
 Definition
Family and Medical Leave Act of 1993.
Term
FMV
 Definition
Fair market value. Used to determine the value of noncash, employer-provided benefits for payroll tax purposes or the value of facilities provided to employees in lieu of wages.
Term
Foreign country
 Definition
A country or territory not under the jurisdiction of the U.S. government.
Term
Foreign Earned Income Exclusion
 Definition
The ability for a U.S. citizen or resident alien working abroad to exclude up to a certain amount of foreign earned income from the taxpayer's gross income.
Term
Foreign Housing Cost Exclusion
 Definition
An exclusion from income for reasonable foreign housing expenses exceeding a base housing amount that is available to U.S. employees working abroad whose tax home is not in the U.S.
Term
Form 1099-MISC
 Definition
Reports amounts paid to nonemployees paid during a calendar year.
Term
FPC
 Definition
Fundamentals of Payroll Certification
Term
Fringe benefits
 Definition
Compensation other than wages provided to an employee, such as health and life insurance, vacations, employer-provided vehicles, public transportation subsidies, etc., that may be taxable or nontaxable.
Term
FSA
 Definition
Flexible Spending Arrangement.
Term
FTD
 Definition
Federal tax deposit.
Term
FUTA
 Definition
Federal Unemployment Tax Act. It requires employers to pay a certain percentage of their employees' wages (up to a maximum wage limit) as a payroll tax to help fund unemployment compensation benefits for separated employees.
Term
GAAP
 Definition
Generally Accepted Accounting Principles.
Term
Gain
 Definition
The difference between the fair market value of stock and the option price.
Term
GAO
 Definition
General Accounting Office.
Term
Garnishee
 Definition
In a payroll context, an employer that receives an order requiring withholding from an employee's wages to satisfy a debt. A garnishee can also be a debtor against whom a creditor has brought a process of garnishment.
Term
Garnishment
 Definition
A legal proceeding authorizing an involuntary transfer of an employee's wages to a creditor to satisfy a debt.
Term
GASB
 Definition
Governmental Accounting Standards Board.
Term
GAW
 Definition
Guaranteed annual wage.
Term
General ledger
 Definition
A ledger containing all the transactions in the debit and credit accounts of a business.
Term
Generally Accepted Accounting Principles (GAAP)
 Definition
A set of rules and procedures set forth by the Financial Accounting Standards Board that outlines accepted accounting practices broadly and in detail.
Term
Gifts
 Definition
Items of value provide by an employer to their employees. The fair-market value of the item is included in the employees' income.
Term
Golden parachute
 Definition
Payments made to business executives in excess of their usual compensation (e.g., stock options, bonuses) in the event the business is sold and the executives are terminated from employment.
Term
Governmental Accounting Standards Board (GASB)
 Definition
Group that sets the standards for governmental accounting practices.
Term
Gross income
 Definition
The compensation for services, including fees, commissions, fringe benefits, and similar items.
Term
Gross pay
 Definition
The total amount received from the employer before any deductions are made.
Term
Gross-up
 Definition
An IRS-approved formula that employers can use to determine the taxable gross payment when the employer wishes to pay the employee's share of tax.
Term
Group legal services plan
 Definition
An employer plan providing for the advance provision or prepayment of personal legal services for employees and their dependents.
Term
Group-term life insurance (GTL)
 Definition
Term life insurance that is provided to employees, with the cost being borne by the employer, the employee, or both.
Term
GSA
 Definition
General Services Administration
Term
GTL
 Definition
Group-term life insurance.
Term
Guaranteed annual wage (GAW)
 Definition
A plan guaranteeing employees their annual income (regardless of the work available) or that they will be kept on the payroll (although possibly at a lower wage).
Term
HCE
 Definition
Highly compensated employee.
Term
Health Insurance Portability and Accountability Act (HIPAA)
 Definition
Law passed in 1996 restricting the right of group health plans to limit participation by newly hired employees and their dependents because of preexisting medical conditions.
Term
Health Savings Account (HSA)
 Definition
Health Savings Accounts (HSAs) are tax-exempt trusts or custodial accounts created exclusively to pay for the qualified medical expenses of the account holder and his or her spouse and dependents, subject to certain qualifications and rules.
Term
HI
 Definition
Hospital Insurance (the Medicare component of FICA).
Term
High-low substantiation method
 Definition
A safe-harbor method (deemed substantiation) for reimbursing lodging, meal, and incidental expenses incurred by an employee who is traveling overnight on the employer's business.
Term
Highly compensated employee (HCE)
 Definition
In the context of certain fringe benefit plans, an employee who is an owner or officer of a business or whose salary exceeds a certain amount (indexed each year for inflation). Many benefits offered by employers do not qualify for favorable tax treatment if they discriminate in favor of highly compensated employees. Employers may also be restricted in their use of safe-harbor valuations of benefits provided to such employees.
Term
HIPAA
 Definition
Health Insurance Portability and Accountability Act.
Term
Housing allowance
 Definition
Payment made to a U.S. citizen or resident alien working abroad to make up the added cost of obtaining reasonable living quarters in a foreign country.
Term
HRIS
 Definition
Human Resource Information System.
Term
HSA
 Definition
Health Savings Account
Term
Immigration Reform and Control Act of 1986 (IRCA)
 Definition
Law enacted in 1986 that prohibits employers from hiring persons who are not authorized to work in the U.S. and from discriminating against those who are authorized to work based on their national origin or citizenship.
Term
Impute
 Definition
The addition of the value of cash/noncash compensation to an employee's taxable wages in order to properly withhold income and employment taxes from the wages.
Term
Incentive stock options
 Definition
A stock option that gives an employee the opportunity to buy the employer corporation's stock at a fixed price for a certain period of time, and that offers favorable tax treatment if certain conditions are met.
Term
Income statement
 Definition
A financial statement showing a company's results of operations for an accounting period or fiscal year.
Term
Income tax treaties
 Definition
Treaties between the U.S. and foreign countries that may have provisions governing the tax treatment of U.S. employees working in those countries as well as that of aliens from those countries working in the U.S.
Term
Indefinite assignment
 Definition
See "Long-term assignment."
Term
Independent contractor
 Definition
A nonemployee contracted by a business to perform services. Although the business specifies the result of the work to be performed, it has no right to control the details of when, how, or who will ultimately perform the work.
Term
Individual Retirement Arrangement (IRA)
 Definition
A trust created or organized for the exclusive benefit of an individual or his or her beneficiaries.
Term
Individual Taxpayer Identification Number (ITIN)
 Definition
A tax reporting identification number issued to aliens in the U.S. who cannot get a social security number but are required to file a tax or information return with the IRS.
Term
Information return
 Definition
A return sent to the IRS (e.g., 1099 series) or the SSA (e.g., Form W-2, Copy A, along with Form W-3) that indicates information relevant to tax liability.
Term
Information statement
 Definition
A statement sent to a payee (e.g., 1099 series) or an employee (e.g., Form W-2) that indicates payments made and taxes withheld by the party issuing the statement.
Term
Integrated
 Definition
Computer systems providing differing processes that share common data.
Term
Interface
 Definition
The place where two systems meet. Suggestion: The software that enables different computer systems (e.g. accounting, payroll and HR) to communicate with each other.
Term
Internal audit
 Definition
An audit of a business's policies, procedures, operations, and records carried out by employees of the business as opposed to outside parties.
Term
Internal control
 Definition
Measures used by a company to safeguard company assets by preventing errors, waste, embezzlement, and fraud.
Term
Internal Revenue Bulletin (IRB)
 Definition
Issued weekly by the IRS. Contains recently issued regulations, revenue procedures, and other agency announcements.
Term
Internal Revenue Code (IRC)
 Definition
Federal tax laws. Generally referred to as the Internal Revenue Code of 1986, which was the year of its latest major overhaul. The IRC also comprises Title 26 of the United States Code.
Term
Internal Revenue Service (IRS)
 Definition
The U.S. government agency that administers the Internal Revenue Code and U.S. tax laws and regulations.
Term
Interstate commerce
 Definition
The exchange of goods and/or services across state lines. It provides a basis for congressional and federal government agency regulation of wages and hours of work and other employment-related matters.
Term
Involuntary deductions
 Definition
Deductions over which employers and employees have no control.
Term
IRA
 Definition
Individual Retirement Arrangement.
Term
IRB
 Definition
Internal Revenue Bulletin.
Term
IRC
 Definition
Internal Revenue Code.
Term
IRCA
 Definition
Immigration Reform and Control Act.
Term
IRS
 Definition
Internal Revenue Service.
Term
ITIN
 Definition
Individual Taxpayer Identification Number.
Term
Journal
 Definition
A record of financial transactions that debit or credit an account.
Term
Key employee
 Definition
In the context of certain fringe benefit plans, an officer or owner (of all or a significant part) of a business whose annual pay exceeds a certain amount. Many benefits offered by employers do not qualify for favorable tax treatment if they discriminate in favor of key employees.
Term
LAN
 Definition
Local area network.
Term
Leased employees
 Definition
Employees of a leasing agency who are hired and trained for the client firm through the agency. Withholding, depositing, and reporting responsibilities remain with the leasing agency.
Term
Levy
 Definition
An attachment to satisfy a tax debt or a court judgment.
Term
Liabilities
 Definition
Debts of a business that have yet to be paid.
Term
Local area network (LAN)
 Definition
A network in which all computers are physically attached to each other and data is transmitted at high speeds over short distances.
Term
Local national
 Definition
An employee who works in the country where his or her home base is located, even though the employee may actually be a citizen of another country.
Term
Long-term assignment
 Definition
A job assignment that is realistically expected to last more than 12 months.
Term
Long-term care insurance
 Definition
An insurance contract providing for coverage of qualified long-term care services, including diagnostic, preventive, treating, mitigating, and rehabilitative services, which is treated as an accident and health insurance contract for payroll tax purposes.
Term
Lookback period
 Definition
The 12-month period running from July 1 of the second preceding calendar year through June 30 of the preceding calendar year. The employer's payroll tax liability during this period determines its depositor status for the current year. The period may be different for some employers.
Term
Mainframe
 Definition
Large, powerful computer that is generally used for company-wide computing since it can handle multiple users and tasks at the same time.
Term
Master file
 Definition
The collection of data describing the employees of a company.
Term
Matching principle
 Definition
Matching revenue earned during an accounting period with the expenses incurred in generating the revenue.
Term
Medical support withholding
 Definition
The process of withholding amounts from an employee's compensation to satisfy a medical support order from a court or a state child welfare administrative agency. The employer is responsible for withholding the amounts and paying them over to the party named in the medical support withholding order.
Term
Medical/dental/health plans
 Definition
Employer-provided plans covering the employee's health insurance. In most cases the value of medical/dental/health plans are not included in the employee's income.
Term
Medicare
 Definition
A federal hospital insurance program for individuals age 65 or older and some disabled persons. It is funded through the hospital insurance (HI) component of FICA tax.
Term
Minicomputer
 Definition
Smaller than a mainframe computer but still able to handle multiple users and tasks on a more limited basis; often used to handle departmental computing needs in large organizations.
Term
Minimum wage
 Definition
The lowest amount that an employer can pay its employees per hour under federal or state law. The federal minimum wage is $7.25 per hour (effective 7/23/09).
Term
Monthly
 Definition
Once per month.
Term
Moving expenses
 Definition
Amounts paid to move an employee from an old home's location to a new home. If the move and the expenses meet certain requirements, the expenses are qualified moving expenses and not taxable. If the move or the expenses do not meet certain requirements, the expenses are nonqualified moving expenses and taxable.
Term
MQGE
 Definition
Medicare Qualified Government Employee. Government employee who has only the Medicare component of FICA, not social security, withheld from wages.
Term
Multiple Worksite Report (MWR)
 Definition
A report developed by the Bureau of Labor Statistics to help it collect statistical information on U.S. businesses with multiple work sites.
Term
MWR
 Definition
Multiple Worksite Report.
Term
NACHA
 Definition
National Automated Clearing House Association.
Term
Net pay
 Definition
That part of an employee's wages that remains after all deductions have been subtracted (e.g., taxes, health insurance premiums, union dues, etc.).
Term
Net worth
 Definition
Amount by which a company's assets exceed liabilities.
Term
Network
 Definition
System connecting computers and applications that consists of the physical connection (topology) and the software.
Term
New-hire reporting
 Definition
The reporting of newly hired and rehired employees to state agencies to facilitate the collection of child support and/or to uncover abuse in the state's unemployment compensation, workers' compensation, or public assistance programs.
Term
NLRB
 Definition
National Labor Relations Board.
Term
No-additional-cost fringe benefits
 Definition
A tax-free fringe benefit for employees consisting of free services offered by an employer at no substantial additional cost to the employer.
Term
Nonaccountable plan
 Definition
An employer's business expense reimbursement plan that does not meet the requirements regarding business connection, substantiation, and returning excess amounts. Payments made under the plan are included in employees' income.
Term
Noncash fringe benefits
 Definition
Benefits provided to employees in some form other than cash (e.g., company car, health and life insurance, parking facility, etc.), which may be taxable or nontaxable.
Term
Nondiscretionary bonus
 Definition
Contractual or agreed-upon bonus or incentive related to production, efficiency, attendance, quality, or some other measure of performance; included in the regular rate of pay.
Term
Nondiscrimination testing
 Definition
Tests that determine whether benefit plans provided by an employer discriminate in favor of highly compensated or key employees. If such discrimination is found, the employer will lose its favorable tax treatment for the benefit. Benefits provided under the plan may be taxable to employees receiving them.
Term
Nonexempt employees
 Definition
Employees who are covered by the minimum wage and overtime provisions of the Fair Labor Standards Act. They may be paid on an hourly or salary basis.
Term
Nonqualified plan
 Definition
In the context of employee benefits, an employer plan that does not meet IRS qualification requirements.
Term
Nonresident alien
 Definition
An individual from a foreign country working in the U.S. who does not pass either the "green card" or "substantial presence" tests and is subject to federal income tax on U.S. source income.
Term
Nonstatutory stock option
 Definition
A stock option plan that gives an employee the opportunity to buy the employer corporation stock at a fixed price for a certain period of time. The employee is taxed on the gain between the price paid and fair market value (FMV) of the stock on the date of purchase.
Term
Normal credit
 Definition
Amount of an employer's timely-paid contributions into a state unemployment insurance fund, taken as a credit against the employer's federal unemployment tax.
Term
Normal retirement age
 Definition
The age at which retirees may receive unreduced social security benefits. Individual company retirement plans may use a different age.
Term
OASDI
 Definition
Old Age, Survivors, and Disability Insurance, also known as social security.
Term
Obligee
 Definition
A person to whom a debt is owed.
Term
Obligor
 Definition
A person who owes a debt.
Term
OCSE
 Definition
Office of Child Support Enforcement.
Term
ODFI
 Definition
Originating Depository Financial Institution.
Term
OMB
 Definition
Office of Management and Budget.
Term
On-call time
 Definition
Nonwork time during which employees are required to be available to handle job-related emergencies.
Term
One-day deposit rule
 Definition
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.
Term
Online processing
 Definition
Processing performed under direct control of the computer (can be batch or real time).
Term
Operating system
 Definition
The computer program that controls the basic operations of a computer (e.g., MS-DOS, UNIX, Windows, Linux).
Term
Opportunity wage
 Definition
A reduced minimum wage ($4.25 per hour) that can be paid to teenagers during their first 90 days at work.
Term
Originating Depository Financial Institution (ODFI)
 Definition
A financial institution that is qualified to initiate deposit entries submitted by an employer as part of the direct deposit process.
Term
Other compensation
 Definition
Compensation other than wages and tips that an employer must report on an employee's Form W-2 and other payments which may be included in the regular rate of pay.
Term
Outplacement services
 Definition
Services provided by employers to help employees find a new job after a layoff or reduction in force.
Term
Overtime premium pay
 Definition
The premium required to be paid under the FLSA to employees who work more than 40 hours in a workweek.
Term
Overtime premium rate
 Definition
Amount equal to one-half of an employee's regular rate of pay.
Term
Overtime
 Definition
The Fair Labor Standards Act (FLSA) requires that all nonexempt employees be paid a premium of 50% of their regular rate of pay for hours worked in excess of 40 hours per week.
Term
Owner's equity
 Definition
The assets of a company minus its liabilities
Term
Paid time off (PTO)
 Definition
Payment received for time not worked due to holiday, illness, vacation, jury duty, bereavement, or the failure of the employer to provide sufficient work.
Term
Payroll card
 Definition
An electronic payment method that allows employees without bank accounts to receive pay through EFT.
Term
Payroll expense
 Definition
Expense that may be recorded in the payroll expense journal by function or by type of pay.
Term
Payroll period
 Definition
The period of service for which an employer pays wages to its employees.
Term
Payroll register
 Definition
A report listing and summarizing the compensation paid and deductions taken from each employee's wages for the payroll period.
Term
Payroll tax
 Definition
Any tax levied by a government agency on employees' wages, tips, and other compensation.
Term
PC
 Definition
Personal computer.
Term
PDS
 Definition
Private delivery service.
Term
PEO
 Definition
Professional Employer Organization
Term
Per diem
 Definition
A flat daily rate of reimbursement for business expenses (e.g., meals, lodging, and incidentals) incurred by employees while traveling overnight on business.
Term
Percentage method of withholding
 Definition
One allowable method for calculating federal income tax withholding from an employee's wages, most often used when the calculation is automated.
Term
Personal computer (PC)
 Definition
Computers that are designed for personal use by having all the computer functionality, operating systems, and applications self-contained.
Term
Pieceworker
 Definition
Worker who is paid per unit, or piece, produced.
Term
Posting
 Definition
Recording a transaction in a journal entry, or recording a journal entry in the general ledger.
Term
Premium pay
 Definition
In a payroll context, the extra pay above an employee's regular rate of pay that is paid for working overtime hours or a special pay rate for work done on weekends, on holidays, during undesirable shifts, or for doing dangerous work.
Term
Pretax deduction
 Definition
A deduction taken from gross pay that reduces taxable wages.
Term
Private delivery service (PDS)
 Definition
A private-sector company that delivers packages. If their services are "designated" by the IRS, materials delivered to them by a taxpayer for delivery to the IRS are considered postmarked on the date the delivery to the PDS is recorded on their database or marked on the package.
Term
Private Letter Ruling (PLR)
 Definition
A ruling provided by the IRS when requested by a taxpayer who wants to know how the tax laws apply to a particular factual situation. The ruling applies only to the taxpayer requesting it and cannot be relied on by other taxpayers.
Term
Prizes
 Definition
An item of value provided to an employee. The fair-market value is included in the employee's income.
Term
Profit
 Definition
Occurs when income exceeds costs and expenses.
Term
PTO
 Definition
Paid time off.
Term
Public-sector employer
 Definition
An employer that is a state or local governmental unit (e.g., county, town, village) or a political subdivision of such a unit (e.g., school district, sewer district).
Term
Qualified plan
 Definition
A benefit plan that meets IRS qualification requirements for tax-favored treatment (e.g., nondiscrimination) under IRC 401(a).
Term
Qualified transportation fringe
 Definition
Certain employer-provided transportation benefits that can be excluded from employees' income up to certain annually adjusted limits (i.e., transit passes, van pools, parking, bicycle).
Term
Qualifying event
 Definition
One of several events that results in the loss of group health insurance coverage for employees or their dependents and entitles them to continued coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA).
Term
Quarterly
 Definition
Once every three months or four times per year.
Term
RDB
 Definition
Relational database.
Term
RDFI
 Definition
Receiving Depository Financial Institution.
Term
Real-time
 Definition
Processing that occurs immediately when the data is entered into the system.
Term
Reasonable basis test
 Definition
A standard used to determine whether a worker can be treated as an independent contractor regardless of whether the common law test is met, based on prior court and administrative rulings, IRS audits, or long-standing practice in the industry.
Term
Receiving Depository Financial Institution (RDFI)
 Definition
A financial institution that receives direct deposit entries from an automated clearinghouse.
Term
Reconcile
 Definition
Process of ensuring that amounts withheld, deposited, paid, and reported by employers agree with each other and, if they do not, determining the reasons and making the necessary corrections.
Term
Reconciliation
 Definition
The balancing process that ensures accuracy of the information.
Term
Regular rate of pay
 Definition
An hourly pay rate determined by dividing the total regular pay actually earned for the workweek by the total number of hours worked.
Term
Regular wages
 Definition
The amount of pay that an employee receives for working.
Term
Regulations
 Definition
The means by which government agencies administer and enforce laws (e.g., rules issued by the IRS to enforce the tax laws).
Term
Reimbursed expense
 Definition
Payment for business-related expenses incurred by an employee on behalf of, or for the convenience of, the employer.
Term
Reimbursement financing
 Definition
An unemployment insurance financing system that allows employers to pay back to the state unemployment trust fund any benefits paid to their former employees rather than paying a tax based on their experience rating. This form of financing is most often used by nonprofit groups and public-sector employers.
Term
Reimbursement Fund
 Definition
See "Flexible Spending Arrangement."
Term
Related corporations
 Definition
A group of corporations meeting certain common ownership and concurrent employment requirements that may be treated as one employer for social security, Medicare, and FUTA taxes.
Term
Relational database (RDB)
 Definition
A file management system that organizes data into a series of tables, each containing a series of related data in columns and rows.
Term
Remuneration
 Definition
Payment for services, including benefits.
Term
Resident alien
 Definition
In the context of payroll, an individual who meets the "green card" or "substantial presence" test for determining resident status in the U.S. Resident aliens are generally subject to federal income, social security, and Medicare taxes on the same basis as U.S. citizens.
Term
Retained earnings
 Definition
Amount that a company's revenue exceeds its expenses, reduced by any amount returned to the owners.
Term
Retroactive pay
 Definition
Pay for time worked in a previous workweek; retroactive pay must be applied to both regular and overtime hours.
Term
Revenue account
 Definition
Identifies amounts received for goods sold and services rendered during the accounting period.
Term
Revenue Procedure (Rev. Proc.)
 Definition
Official statements from the IRS on how to carry out tax compliance.
Term
Revenue Rulings (Rev. Rul.)
 Definition
Published decisions issued by the IRS that apply the tax laws to a particular set of facts. They can be used by taxpayers to determine their tax liability in similar factual situations.
Term
Revenue
 Definition
Income received for goods and services provided by an organization.
Term
Roth 401(k)/403(b)
 Definition
A part of an employer's 401(k)/403(b) plan that defers taxation on the plans earnings. The contributions to a Roth 401(k)/403(b) are taxable wages for federal income, social security, and Medicare taxes.
Term
RRTA
 Definition
Railroad Retirement Tax Act.
Term
Safe harbor
 Definition
An IRS-approved alternative method (usually a short cut) for complying with IRS rules, regulations, and procedures (e.g., per diem allowances and high-low substantiation).
Term
Salary reduction arrangement
 Definition
See "Cash or deferred arrangement."
Term
Sarbanes-Oxley Act of 2002 (SOX)
 Definition
The Sarbanes-Oxley Act is a federal law that focuses on accounting reforms for financial reporting and disclosure for public companies. This act requires chief executive to take personal responsibility for the accuracy and completeness of corporate financial statements, plus other important issues.
Term
Savings incentive match plans for employees of small employers (SIMPLE Plans)
 Definition
Retirement plans for employees of small employers (no more than 100 employees) that have simpler administrative and nondiscrimination requirements than other retirement plans.
Term
SECA
 Definition
Self-Employment Contributions Act.
Term
Segregation of duties
 Definition
A basic principle of internal control that prevents individuals from having responsibility for all phases of a job process, thus guarding against misuse or misappropriation of company assets.
Term
Self-Employment Contributions Act (SECA)
 Definition
Requires self-employed individuals to pay both the employer and employee share of social security and Medicare taxes.
Term
Semiannual
 Definition
Twice per year or once every six months.
Term
Semimonthly
 Definition
Twice per month.
Term
SEP
 Definition
Simplified employee pension.
Term
Severance pay
 Definition
A payment offered by some employers to terminated employees (usually those who are terminated through no fault of their own) that is designed to tide them over until new employment is secured.
Term
Shift differential
 Definition
Extra pay received by employees for working a less-than-desirable shift (e.g., evenings or late nights).
Term
Short-term assignment
 Definition
See Temporary assignment
Term
Sick pay
 Definition
Replacement wages paid to an employee who cannot work because of an illness or injury that is not work-related.
Term
SIMPLE plans
 Definition
Savings incentive match plans for employees of small employers, a type of qualified retirement plan.
Term
Simplified employee pension (SEP)
 Definition
An individual retirement arrangement (IRA) with special participation requirements that is available for small employers.
Term
SIT
 Definition
State income tax.
Term
Social Security Administration (SSA)
 Definition
The federal government agency that administers social security.
Term
Social security number (SSN)
 Definition
An individual's Taxpayer Identification Number; consists of nine digits (000-00-0000).
Term
Social Security Number Verification Service (SSNVS)
 Definition
An online service offered by the Social Security Administration allowing employers to verify the accuracy of their employees' social security numbers.
Term
Social Security Statement
 Definition
Statement from the Social Security Administration that provides an employee with a year-by-year display of the employee's earnings reported to the SSA and an estimate of retirement, survivors', and disability benefits the employee (and family) may be eligible for, now and in the future.
Term
Social security
 Definition
The Old Age, Survivors, and Disability Insurance (OASDI) component of FICA.
Term
Special accounting rule
 Definition
A safe-harbor rule that allows employers to treat certain noncash fringe benefits provided to employees in November or December as received in the following year. If an employer uses the special accounting rule, the employee must also report the benefit for the same period.
Term
Special wage payments
 Definition
Payments made to employees or former employees for services performed in an earlier year. These payments require special reporting by employers so that retirees' social security benefits are not reduced under the annual earnings test because of amounts earned in prior years.
Term
Split shifts
 Definition
A workday that is divided into two parts separated by a spread of hours longer than the conventional rest or meal period.
Term
SSA
 Definition
Social Security Administration.
Term
SSN
 Definition
Social security number.
Term
SSNVS
 Definition
Social Security Number Verification Service
Term
Statement of cash flow
 Definition
Financial statement that shows the sources and uses of cash during the accounting period.
Term
Statute of limitations
 Definition
A period of time established by law during which parties can take legal action to enforce their rights.
Term
Statutory employees
 Definition
Special groups of employees identified by law (e.g., full-time life insurance salespeople, certain homeworkers) whose wages are not subject to federal income tax withholding but are subject to social security, Medicare, and FUTA taxes.
Term
Statutory nonemployees
 Definition
Special groups of workers who may qualify as common law employees but are treated under the law as independent contractors (e.g., qualified real estate agents and direct sellers); their compensation is not subject to federal income tax withholding, social security, Medicare, or FUTA taxes.
Term
Straight time
 Definition
The number of work hours during a workweek for which an employee's regular hourly rate of pay will be paid.
Term
SUB
 Definition
Supplemental unemployment benefits.
Term
Subsidiary ledger
 Definition
Replaces a journal; summarized entries are posted from subsidiary ledgers directly to the general ledger; arose with the computerization of most companies' accounting systems.
Term
Substantiation
 Definition
In the context of reimbursed employee business expenses, the requirement that employees keep records of the time, place, and business purpose of reimbursable expenses they incur, including receipts (also used to track business use of company-provided vehicles).
Term
Substitute forms
 Definition
Tax forms that are printed by private printers rather than the Internal Revenue Service. They must meet certain specifications to be acceptable for filing.
Term
SUI
 Definition
State unemployment insurance.
Term
Supper money
 Definition
The irregular and occasional payment of amounts to employees who work late to cover the cost of meals eaten during that extra working time.
Term
Supplemental unemployment benefits (SUB)
 Definition
Employer plans that provide supplements to state unemployment compensation benefits.
Term
Supplemental wages
 Definition
Compensation received by employees other than their regular pay, such as bonuses, commissions, and severance pay. Income tax may be withheld from such payments at a flat rate under certain circumstances.
Term
System edit
 Definition
Warning or alert built into computer software; a system edit checks for errors and either corrects them or notifies the operator that something may be wrong; system edits generally check for values outside accepted ranges (e.g., negative net pay).
Term
Table I
 Definition
Refers to IRS Uniform Premiums Table I, which is used to calculate the value of group-term life insurance over $50,000.
Term
T-account
 Definition
Diagram used for recording entries into an account.
Term
Take-home pay
 Definition
In the context of a federal tax levy, the amount of an employee's wages that remains after all normal deductions in effect at the time of the levy have been subtracted. (See Net pay)
Term
TAMRA '88
 Definition
Technical and Miscellaneous Revenue Act of 1988.
Term
Tangible
 Definition
Type of asset that includes land and improvements, buildings, computers and software, furniture, and automobiles.
Term
Tax equalization plan
 Definition
A plan offered by an employer to an employee working abroad that would provide the employee with the same take-home pay he or she would have in the U.S.
Term
Tax levy
 Definition
Requires employers to deduct an amount of money that the employee owes, plus any penalties and interest payments, from the employee's wages and remit it to the proper government agency.
Term
Tax protection plan
 Definition
A plan offered by an employer to an employee working abroad that would guarantee the employee a foreign tax obligation no larger than he or she would have in the U.S.
Term
Tax Reform Act of 1986
 Definition
Sweeping tax reform legislation that lowered tax rates and sought to eliminate many of the loopholes in the tax laws.
Term
Taxable wage base
 Definition
The maximum amount of employee compensation subject to social security, FUTA, and state unemployment insurance taxes.
Term
Taxable wages
 Definition
The amount that is included in an employee's income for income, social security, and Medicare tax purposes.
Term
Taxpayer Identification Number (TIN)
 Definition
A social security number, employer identification number, or individual taxpayer identification number which serves as the taxpayer's account number with the IRS.
Term
TEFRA
 Definition
Tax Equity and Fiscal Responsibility Act of 1982.
Term
Temporary assignment
 Definition
A job assignment that is realistically expected to and in fact does last less than 12 months.
Term
Temporary help agency employees
 Definition
Workers hired through temporary help agencies who are screened and trained by the agency to provide services for client firms. They are employees of the agency rather than the client firm.
Term
Third-country national
 Definition
In the context of U.S. payroll, someone who is a non-U.S. citizen working in a country other than the U.S.
Term
Third-party sick pay
 Definition
Payments made by a third party, such as a state or private insurer, to employees because of non-job-related illness or injury.
Term
TIN
 Definition
Taxpayer Identification Number.
Term
Tip credit
 Definition
A reduction in the minimum wage allowed for tipped employees (e.g., $5.12; effective 7/24/09).
Term
Tips
 Definition
The amount an employee in the hospitality industry receives from their customers. Employees are required to report the amount received to their employer, who must include the amount in the employee's income and withhold taxes from the amount.
Term
Title VII
 Definition
The employment discrimination portion of the Civil Rights Act of 1964, which prohibits job bias based on race, sex, color, religion, or national origin.
Term
Totalization agreements
 Definition
Agreements between the U.S. and foreign countries that prevent double social security and Medicare taxation of U.S. employees working temporarily abroad and aliens working temporarily in the U.S.
Term
TRA '86
 Definition
Tax Reform Act of 1986.
Term
Transportation fringe benefits
 Definition
Nontaxable benefits provided to the employee when van pooling to work, using public transportation, or when provided parking. Each benefit has a limit to the value of the benefit excluded from income.
Term
Trust fund taxes
 Definition
The amounts withheld by employers from employees' pay for federal income, social security, and Medicare taxes. They are referred to as trust fund taxes because the money is held in a special trust fund for the U.S. government. Amounts withheld for state and local income taxes are held in trust for the state or local government.
Term
TSA
 Definition
Tax-sheltered annuity
Term
TSCA
 Definition
Tax-sheltered custodial account
Term
U.S. Citizenship and Immigration Services
 Definition
The agency which regulates Form I-9.
Term
UC
 Definition
Unemployment compensation.
Term
UI
 Definition
Unemployment insurance.
Term
UIFSA
 Definition
Uniform Interstate Family Support Act.
Term
Unearned income
 Definition
Income from a source other than employment income.
Term
Uniform Interstate Family Support Act (UIFSA)
 Definition
Model state child support enforcement law under which employers must put into effect a child support withholding order from another state's child support enforcement agency if the order appears "regular on its face."
Term
Uniform Premiums Table
 Definition
See "Table I."
Term
Uniformed Services Employment and Reemployment Rights Act (USERRA) of 1994
 Definition
Federal law guaranteeing, among other things, the right of U.S. veterans to make additional elective deferrals under their employer's 401(k) plan for the time they spent in military service.
Term
USC
 Definition
United States Code, where federal laws are compiled.
Term
USCIS
 Definition
U.S. Citizenship and Immigration Services
Term
USERRA
 Definition
Uniformed Services Employment and Reemployment Rights Act of 1994.
Term
Validity edits
 Definition
Shows whether or not data entered meets the requirements set forth by a company.
Term
Voluntary contribution
 Definition
Advance payments of unemployment tax that can reduce an employer's state unemployment tax rate.
Term
Wage assignment
 Definition
A voluntary agreement by an employee to transfer portions of future wage payments (e.g., insurance premium deductions, credit union deductions).
Term
Wage attachment
 Definition
An involuntary transfer of an employee's wage payment to satisfy a debt.
Term
Wage base
 Definition
Wage limit beyond which an employee's wages are not taxed.
Term
Wage orders
 Definition
State agency directives that set wage and hour standards, usually for specific industries.
Term
Wage-bracket withholding method
 Definition
A procedure for calculating the amount of federal income tax to be withheld from an employee's wages based on wage-bracket tables classified by the employee's marital status and payroll period.
Term
Wage-Hour Law
 Definition
See "Federal Wage-Hour Law."
Term
WAN
 Definition
Wide area network.
Term
WC
 Definition
Workers' compensation.
Term
Weekly
 Definition
Once per week.
Term
White-collar employees
 Definition
In the context of the Federal Wage-Hour Law, executive, administrative, professional (including computer-related professionals), or outside sales employees who are exempt from the law's minimum wage, overtime pay, and certain record-keeping requirements.
Term
Wide area network (WAN)
 Definition
A network in which information is transmitted over long distances at relatively slower speeds using telephone lines.
Term
Withholding allowance
 Definition
Reduces the amount of wages subject to federal income tax withholding based on exemptions and deductions claimed on federal income tax Form 1040.
Term
Withholding
 Definition
Subtracting amounts from an employee's wages for taxes, garnishments or levies, and other deductions (e.g., medical insurance premiums, union dues). These amounts are then paid over to the government agency or other party to whom they are owed.
Term
Worker classification
 Definition
The process of determining whether an individual performing services for a business is either an employee or an independent contractor.
Term
Working condition fringe benefit
 Definition
Benefits provided to an employee that are required for the employee's job. These benefits are not taxable.
Term
Work-sharing plan
 Definition
An agreement to reduce some employees' hours to avoid laying off other employees. Those employees whose hours were reduced receive partial unemployment benefits.
Term
Workstation
 Definition
In the context of computers, a powerful personal computer that is generally faster than a standard PC.
Term
Workweek
 Definition
The basis for determining an employee's regular rate of pay and overtime pay due under the Fair Labor Standards Act. It can be any consecutive seven-day (168-hour) period chosen by the employer (e.g., Saturday through Friday, Wednesday through Tuesday).
Term
ZBA
 Definition
Zero balance account
Term
Zero balance account (ZBA)
 Definition
An account where funds are transferred as needed from another account to meet the demands of items, such as paychecks, that are submitted for payment. In a ZBA account, the beginning balance and the ending balance for a period will always be zero.
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