TO: Principal Investigators and Fiscal Officers
Effective 1/01/11, President Obama’s Tax Relief Act of 2010 went into effect lowering the employee’s Social Security rate from 6.2% to 4.2%. The employer’s Social Security rate remained the same at 6.2%, as well as the Medicare taxes at 1.45% for both the employee and employer.
Unfortunately, the employer’s FICA taxes which were posted to your project accounts as part of the fringe benefit charges were incorrectly calculated at 5.65% (4.2% Social Security + 1.45% Medicare) instead of 7.65% (6.2% Social Security + 1.45% Medicare) for 3 pay periods ending 12/31/10, 1/15/11 and 1/31/11. We are working on making fringe benefit adjustments for the additional 2% to be posted to your project accounts this week and next week.
We sincerely apologize for this problem and the inconvenience that this will certainly cause in the reconciliation of your accounts. Please be assured that the problem has since been fixed and the employer’s FICA charges from pay period ending 2/15/11 will be posted to the project accounts at the correct rate of 7.65% of taxable income.
The employees’ FICA taxes are calculated correctly on their paychecks.
Should you have any questions, please contact us at [email protected].