The President’s newly proposed 2007 budget, announced last week, has some provisions intended to improve efficiency in tax administration as well as unemployment insurance (UI) integrity that should be of interest to the staffing industry. The various proposals put forth in the new budget are also intended to reduce the federal budget deficit.

Among the specifics of the proposals is a Treasury Department entry to extend the 0.2% Federal Unemployment Tax Act surtax, which is set to expire at the end of 2007. The Treasury Department’s proposal would extend the surtax through 2012 and also includes the following:

• Various provisions that enable employers to offset unemployment compensation overpayments from federal income tax refunds.
• Limits on employer due process rights to make collection of unpaid federal unemployment funds easier.
• Provisions that would allow the IRS to access the National Directory of New Hires to simplify tax administration for that agency.

The Department of Labor has also introduced several proposals in the new budget, namely:

• New regulations that prohibit states from “noncharging” an employer’s unemployment tax account for improper payments.
• A mandatory 15% state penalty for fraud with penalty funds to be used to conduct payment integrity studies and activities.
• A requirement that employers accurately report the “start work” date on new hire reports to help identify claimants who have returned to work but continue to claim and receive benefits.

Note: budget proposal details provided by the American Staffing Association

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