Passport Business Solutions™ and RW32™ 2005 Year End Updates-Available for these versions:

2005 Year-End Update Details for Passport Business Solutions™

The PBS Version 11.3 PUP shipment contains the 2005 Year-end changes necessary for processing W-2 and 1099 submissions for paper and magnetic media. Applying the V11.3 PUP to a V11.2 system or applying the V11.2 Y/E patch to a V11.2 system will produce a 2005 Year-end compatible version of the software. Applying the V11.3 update to PBS will change all modules to revision level 11.3.0. Applying the 11.2 Y/E patch to 11.2 will change Payroll to V11.2.4 and the others as given in the above table, leaving all other modules alone.

Other than the patches for payroll (11.2.4) all the other patches are optional for year-end processing and can be omitted. They are included as a convenience and have already been published as downloadable patches on our web site. Note also that anyone with customized software should review the list of patches before applying the set. Some of the patches may affect the running of your customized software.

For the 2005 Tax Year, there are changes in the formatting of W-2 magnetic media. The printed W-2 form remains the same as 2004, except for the date, however there is additional information that can print on the form. Similar changes also had to be made to the 1099's produced out of the payroll module. As a result of these changes most PBS users will want to update their software to process the year-end. (The potential exceptions include people who are submitting W-2's or 1099's entirely via paper/printed forms and who also are NOT using any of the three new reporting fields introduced for the 2005 Tax Year (Nontaxable Combat Pay-W-2 Box 12q; Deferrals under a Section 409A-W2 Box 12y – 1099 Box 15a, Income under Section 409A-W-2 Box 12z – 1099 Box 15b).

The 2005 Year-end numbers include:

• The social security maximum wages has increased to $94,200 for tax year 2006.
• Subject to individual plan differences the 401(k) limit is now $15,000 with an additional $5,000 if the ‘50+ catch-up' is utilized.

Additional items for Magnetic Media submitters using the BSO (Business Services Online) for submission of W-2 information:

December 2005. If you have already registered, change your password to keep your PIN from expiring. Passwords must be changed at least once every 365 days. BSO will not be available between December 9, 2005 and December 18, 2005.

Beginning December 19, 2005
BSO will begin accepting Tax Year 2005 submissions on December 19, 2005.

March 31, 2006
The Internal Revenue Service will consider electronic annual wage reports for Tax Year 2005 to be late if they are submitted after March 31, 2006.

The above information and much other useful information, directions for help and telephone numbers are available at:

http://www.socialsecurity.gov/employer/bsohbnew.htm#new

Anyone contemplating interacting electronically with the Social Security Administration (SSA) through the BSO should spend some time on the above site becoming familiar with the rules, procedures and requirements.

Another useful site for IRS information is: http://www.irs.gov/instructions/iw2w3/ar01.html

This year magnetic tapes and cartridges are not longer accepted. This is also the last year for 3 ½ diskettes to be accepted.

These older electronic formats should be replaced with the online submission system using the MMREF-1 specification which is part of the PBS software. Currently the magnetic submission options are mandatory if submitting 250 or more W-2 forms and is encouraged for fewer employees.

1099’s and Magnetic Media

Employers who have registered and used the online submission system, called “FIRE”, in the past obtained an Employer Identification Number (EIN). If the user has not used the system in more than a year, the Personal Identification Number (PIN) that was issued as part of the registration process may have to be re-established. The system will inform the user if this is the case when they attempt to login. The logon site for the FIRE system is: http://fire.irs.gov

More information on obtaining an EIN is located at http://www.irs.gov

(In the upper right hand corner, enter keyword EIN in the search box.) You may also call 800-829-4933.

The governing IRS document for 1099's is publication 1220 and this may also be obtained in PDF format at the same site by entering “1220” in the publications search box also in the upper left.

In addition, to electronically submit data to the IRS, a TCC (Transmission Control Code) will be required. The TCC must be entered into the PBS software during the process of creation of the Magnetic 1099's. This code will need to be renewed if it has not been used in two years. To obtain a TCC code, a Form #4419 must be filled in and submitted to the IRS. Details on this submission process are available in the Publication 1220 referred to above. As with the 1220 publication, the 4419 form can be obtained online at the above URL – use 4419 in the publications/forms search.

Printed W-2s and Magnetic Media W-2s - Changes for 2005

The major change for the Tax Year 2005 is the introduction of 3 new reporting fields. This set of changes affects both the printed forms and the magnetic media submission.

• New Code Q. We added Code Q–Nontaxable combat pay, to the list of codes for box 12 for use by military employers.

• New Code Y.  We added Code Y–Deferrals under a section 409A nonqualified deferred compensation plan, to the list of codes for box 12.

• New Code Z.  We added Code Z–Income under section 409A on a nonqualified deferred compensation plan, to the list of codes for box 12.

• Nonqualified deferred compensation plans.  New section 409A, added by the American Jobs Creation Act of 2004, provides that all amounts deferred under a nonqualified deferred compensation (NQDC) plan for all taxable years are currently includable in gross income unless certain requirements are satisfied.

The PSI PR software has been modified to allow entry of this data into the Federal Aux file table (EMPFAU). This data is entered by “ PR/Year-end/Enter W-2 Information ” under the F7 option.

In parallel with the above changes to the W-2's, the 1099's have also been changed to reflect the addition of data for the 409A nonqualified deferred compensation plan - Deferrals and Income. The old Box 15 from previous years has been split in two and these two fields are printed in Box 15a and Box 15b respectively. Similar changes have been made to the magnetic media formats. This data is entered via a new menu entry “ PR/Year-end/Enter 1099 Information ”.

Forms

PSI continues to support the following form types for W-2's [the entries in brackets correspond to Trainor Business Forms & Printing part numbers ( 800-356-7925 http://www.trainorprinting.com ). In many cases other part numbers are available for different numbers of multi-parts i.e. 5 or 6 part:

• W-2 One Wide also called Continuous Single (form size is approx. 8 ½ by 11 with two forms per sheet). When printing this form in PBS select “S” - Single and “N” for using W2 Mailers. [Form X17 4part]

• W-2 Twin Sets – same as the W-2 One Wide except in this case two separate boxes of forms each with a different form type are purchased to allow for the printing of the different copies - one box has a multipart form with Copy A, 1, D (Form#13) and the other box has Copy B, C, 2 (Form#13A). When printing this form in PBS select “S” - Single and “N” for using W2 Mailers. [Form X13 3 part], [Form X13A 3 part]

• W-2 Mailer 1 Wide also called Continuous Self-Mailer Single – same as the W2 One Wide except the form includes a mailer envelope after the A and D copies. The envelope contains the B and C copies. When printing this form in PBS select “S” - Single and “Y” for using W2 Mailers. [Form XF1 4 part]

• W-2 2-Wide Continuous also called 2 Continuous Single (form size is approx 14 by 11 with two compound forms per sheet. The right side is formatted for the Copy A (the red copy) and includes multiple additional parts for Copy B, C and D. The left side is a smaller version of the W-2 form and is suitable for Copies D, 1 or 2. This is the version of the form that requires “RED on the RIGHT”. When printing this form in PBS select “D” - Double and “N” for using W-2 Mailers. [Form X2 4 part]

• Laser W-2 Cut Sheets also called Laser Single (form size is approx. 8 ½ by 11 with 2 forms per sheet. When printing this form in PBS select “S” - Single and “N” for using W-2 Mailers. [Forms LW2A (Copy A/red copy), LW2B (Copy B), LW2C (Copy C), LW2D1 (Copy D and 1), LW22 (Copy 2)]

*** Think Right ***

PSI is supporting the "red on the right " two-wide W-2, and the 4UPLaser with the #12 boxes right justified.

We believe in getting it right !