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Glossary
Confused about a specific term or acronym? Solve the mysteries of terminology with this informative resource. Updated regularly with industry-specific vocabulary and concepts, the Glossary provides easy-to-understand definitions of tax-related terms.
Crystal Clear Communication.
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- 3PSP
See Third Party Sick Pay
- 401(k), 403-B, 408(k), 501-C
A cash or deferred arrangement 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employer) and any earnings on them are not subject to federal income tax (and most state income taxes) until they are withdrawn.
- Agency
Any governmental taxing authority.
- Agent Bank
A bank having a direct working relationship with ADP.
- Aid to Families with Dependent Children (AFDC)
Assistance payments made by state welfare agencies to qualifying families who are deprived of financial support by reason of the death, disability, or continued absence (including desertion) of one of the parents. AFDC is known in many states as ADC (Aid to Dependent Children).
- Amendment
A corrected tax return intended to replace a previously filed quarterly or annual tax return.
- AOC
See Advice of Credit.
- Applied For Employer Identification Number
An Employer Tax Identification Number (EIN) that has been requested from an agency but not yet received.
- Arrearages
Unpaid child support payments and related assessments owed by a parent who is obligated to pay.
- Assignment of Support Rights
When a person receiving public assistance agrees to turn over to the state any right to child support, including arrearages, paid by the obligated parent in exchange for receipt of an AFDC grant and other benefits.
- Automated Clearing House (ACH)
A Federal Reserve Bank acting on behalf of an association of financial institutions that operates a facility (system) that serves as a clearinghouse for direct deposit or other electronic payment transactions; entries are received and transmitted by the ACH under the rules of the association. Funds moved from bank A to bank B must go through the ACH.
- AutoPay®
ADP's primary payroll processing system. AutoPay is used in conjunction with ADP products and services typically targeted to companies with more than 100 employees.
- Average Taxable Payroll
The average of the taxable payrolls of an employer for a specified period immediately preceding the tax rate computation date.
- Backup Withholding
Usually Federal Income Tax (FIT) withheld from interest payments to a customer's bank account when no Social Security Number is on file. Financial institutions are required to deposit and report this withholding with their federal payroll taxes on Form 945. Banks, savings and loans, and similar types of institutions are required by law to withhold 31% of taxable interest or dividends paid on accounts that have failed to furnish correct taxpayer identification numbers (Social Security numbers).
- Bank Release Date
The day the payroll tax debit is sent to the bank.
- Benefit Ratio (BR)
A calculated formula used by some states to compute the Unemployment Insurance Experience Tax Rate. The Benefit Ratio is computed by dividing the taxable wages for the previous three to five year period by the benefits charged for the same period. In most states, this ratio is then compared to the state-rating table to determine the employer tax rate.
- Branch Code
A two-digit alpha or numeric code assigned to identify each ADP Payroll Region.
- CAA
Client Account Agreement. A CAA is used to authorize the transfer of funds from a client's bank to ADP.
- CD
See Check Digit.
- Calendar Quarter
The four quarters of the year as follows: January to March, April to June, July to September, and October to December.
- Calendar Year
January 1 through December 31. (Also see: Fiscal Year)
- Check Digit (CD)
A calculated digit used to verify a series of numbers. Most commonly used by taxing agencies to verify identification numbers.
- CIT
See City or Local Income Tax.
- City or Local Income Tax
A withholding tax deducted from an employee's wages as required by a city or local jurisdiction. The amount of withholding varies with the amount of earnings, frequency of pay, number of claimed exemptions, and marital status.
- Client Service Representative (CSR)
An ADP associate responsible for answering client questions and resolving client inquiries.
- Combined Filing
A filing which includes the liability and deposits for more than one tax type. For example, California requires combined State Income Tax (SIT), State Unemployment Insurance (SUI) and State Disability Insurance (SDI) deposits and filings. New York requires combined State Income Tax (SIT) and City Income Tax (CIT) deposits and filings.
- Combo
Combined. Used in reference to two or more Tax Filing Service company codes that share an Employer Tax Identification Number (EIN).
- Common Pay Agent
Refers to the Internal Revenue Service (IRS) rules that allow employers with multiple Federal Employer Identification Numbers (FEINs) to consolidate tax returns and tax payments under one FEIN. The purpose of the Common Pay Agent program is to simplify employer tax reporting through the consolidation of filings (i.e., Form 941).
- Common Paymaster
Refers to the Internal Revenue Service (IRS) rules that allow related corporations that employ the same individual to be considered a single employer for the purposes of calculating Social Security and Federal Unemployment Tax.
- Company Code
An identification code assigned to every ADP client to help en
- Complaint
A written document filed in court in which the person initiating the action names the persons, allegations, and relief sought.
- Consent Agreement
Voluntary written admission of paternity or responsibility for support.
- Constructive Receipt
The Internal Revenue Service (IRS) doctrine stating that wages generally are taxable and subject to employment tax withholding (e.g., Social Security, Medicare, Federal Income Tax, and Federal Unemployment Tax) when actually paid or when made available to employees without substantial limitation.
- Contribution - Employee
In most states the employer contribution finances 100% of the Unemployment Insurance Fund. In a limited number of states, the employee is also liable for contributions through payroll withholding. Failure to withhold employee contributions as directed will result in employer liability for all monies not withheld. Employers withholding for employee contributions in non-contribution states may be subject to fines and criminal prosecution.
- Contribution - Employer
Payments to the state unemployment fund as taxes, including voluntary contributions and special assessments paid by subject employers. The contribution amount is determined by multiplying the employer taxable payroll by the assigned unemployment tax rate.
- Contribution Rate
See Tax Rate
- Contribution Rate Notice
See Tax Rate Notice
- Contribution Report
An employer report of total wages and taxable wages including a calculation of the contribution amount due to the state unemployment fund. The majority of states require quarterly report filing.
- Conversion Representative
This is a generic term for an ADP associate who assists with the conversion from a client's current HR or payroll system to ADP.
- Correspondence Address
The mailing address where ADP Tax Filing Service clients want to receive their Statement of Deposits and Filings.
- Covered Employer
An employer that is subject to the provisions of the Employment Security Law. An employer achieves liability based on one or more of the following conditions: employing a minimum specified number of workers and/or duration of employment; the nature of the employment; the amount of wages paid for services in employment; the acquisition of a business; or voluntary election of coverage for non-mandated employers.
- Covered Employment
Generally, any person performing services for a company is an employee if the company can control what, when and how the job functions are to be done. Federal law defines these individuals as "common law" employees. If an employer-employee relationship exists, it does not matter what terminology the employer uses to describe the employees. Employees can include managers, supervisors and corporate officers. (Directors of a corporation, as well as officers of a corporation that perform no services or that are paid no wages, are usually not considered employees.) An employer must report and pay contributions on the wages of all of its employees. Employers should consult the laws of the states in which business is conducted to determine if employees' wages should be reported. States will at times have differing regulations than the FUTA guidelines.
- Covered Wages
Under FUTA, wages include all cash payments made to employees for services rendered, including salaries, commissions, vacation allowances, fees, bonuses, back pay and many fringe benefits. It does not matter in what form the payment is made, when it is made, or on what measurement of production it is based. Wages also include the cash value of remuneration paid other than cash, such as the reasonable value of food or lodging allowed to an employee as part of the employment relationship. Certain payments and benefits are considered exempt under FUTA, as an example, cafeteria plan contributions are only exempt in about half the states. Necessary business expenses incurred in connection with employment and reimbursed or advanced to employees (such as per diem allowances and traveling or moving expenses) are usually not considered taxable wages. For business expenses to be exempt from wages the employer must identify those payments on separate detailed records. If properly documented most states will consider such payments exempt, even if not specifically exempted by law or regulations.
- CR
See Credit.
- Credit (CR)
A negative amount applied against accumulated values. This usually refers to the credit an ADP client receives against impounded taxes, or a credit or refund due from a taxing agency for overpayment of taxes.
- Credit Elect
If taxes have been over-deposited in a quarter, some agencies allow the overpayment to be applied (credit elected) against future liabilities in a subsequent quarter.
- Credit Reduction
In states or territories with outstanding loans from the Federal Unemployment Trust Fund, employers are not entitled to the full credit for unemployment contributions paid to those states. Credit Reduction States and the applicable rates are published annually in Part 1, line 6 of Form 940 (Unemployment Annual Reconciliation). See also Federal Unemployment Tax (FUTA).
- CSR
See Client Service Representative.
- Custodial Parent
Person with whom a child lives and who has legal custody. It may be a parent, relative, or other individual.
- Custody
The legal determination which establishes with whom a child shall live.
- DBA
See Doing Business As.
- DDA
See Demand Deposit Account.
- DDF
See Direct Debit of Fees.
- Debit (DR)
A charge that usually refers to the charging of taxes, Direct Debit of Fees (DDF), or an employer payroll tax debit.
- Debit Elect
If taxes have been under-deposited in a quarter, the taxpayer can choose to pay the balance due in the next quarter if the taxing agency does not require a quarterly return.
- Default
Failure of a defendant to file an answer, response, or appeal in a civil case within a certain number of days after having been served with a summons and complaint.
- Default Judgment
Decision made by the court when a defendant fails to respond to a summons and complaint.
- Defendant
Person against whom a civil or criminal proceeding has been initiated.
- Delinquent Account
An employer's account is considered delinquent if any of the quarterly contribution and wage reports and/or unemployment taxes have not been submitted to the state agency by the prescribed due date.
- Demand Deposit Account
The bank account used by an ADP client for the charging of payroll liabilities.
- DI
See Disability Insurance.
- Direct Debit of Fees
The charging of payroll fees through an ACH transaction.
- Direct Deposit
The electronic transfer of an employee’s net pay directly into financial institution accounts designated by the employee, thus avoiding the need to receive a "live" paycheck.
- Direct Send
A direct daily transmission established at a bank to accelerate the posting of debit and credits and to obtain improved information on returned items.
- Direct Wire Transfer
See Wire Transfer.
- Disability Insurance (DI)
A monetary compensation plan provided by the government and/or an employer to support employees who are disabled due to illness or injury.
- District Manager (DM)
Refers to an ADP sales associate.
- Divestiture
When an employer sells all or part of its business to an unrelated entity.
- Division
A part of a company not filing under it's own federal and state account numbers. It is possible to have several divisions in one state under the same account number. (Also see: Subsidiary)
- DM
See District Manager.
- Doing Business As (DBA)
The name under which an individual or business operates.
- DR
See Debit.
- Earned Income Credit (EIC)
A special federal program that allows low-income employees to be reimbursed by their employers for a portion of their Federal Income Tax (FIT) withholdings. Employer can then claim those reimbursements as credits on Form 941 (Quarterly Federal Return).
- Easy Pay
ADP payroll solutions for companies with 1 to 99 Employees.
- EBS
See Emerging Business Servicessm.
- EBTS
See Electronic Business Tax Service.
- EE
Employee.
- EFT
See Electronic Funds Transfer.
- EFTPS
See Electronic Federal Tax Payment System.
- EIC
See Earned Income Credit.
- EIN
See Employer Tax Identification Number.
- ELECTRONIC BUSINESS TAX SERVICE
Electronic Business Tax Service (EBTS) An added-value ADP service that enables clients to use a touch-tone telephone system to deposit business income and excise tax payments electronically as required by the Electronic Federal Tax Payment System (EFTPS).
- ELECTRONIC FEDERAL TAX PAYMENT SYSTEM
Electronic Federal Tax Payment System (EFTPS) An electronic system for reporting
and paying federal taxes. Typically refers to an Internal Revenue Service (IRS)
regulation requiring that taxpayers within a specific threshold for federal
employment tax deposits make all of their business tax payments electronically.
For more information visit this www.eftps.gov
- Electronic Funds Transfer (EFT)
Some states and federal agencies require employers to pay unemployment taxes by electronic funds transfer. There are several regulations for electronic funds transfer.
- Emerging Business Services ®
A division of ADP serving employers with less than 100 employees.
- Employee Leasing Company (PEO)
A company that leases employees, to another business, on a contract basis. They handle all personnel matters and are generally considered the employer of the leased employees.
- Employer Contributions
See Contributions - Employer
- Employer Services
The business unit of ADP engaged in providing clients with employer-related services, including human resource management and payroll processing.
- Employer Tax Identification Number (EIN)
A 9-digit state identification number, e.g., 12-3456789, assigned to each employer by the Internal Revenue Service (IRS). This number must be used on all documentation submitted to the agency. In some states, the EIN is the same as the Federal Employer Identification Number (FEIN).
- Enforcement
The act of obtaining payment of a child support or medical support obligation.
- ER
Employer.
- Escheat
The legal process followed to turn over unclaimed client funds (e.g., uncashed refund checks) to the state government. The state then attempts to contact the property holder to return their funds to them. ADP client checks are only relinquished to the state where the business is located.
- Exempt from Withholding
An employee who claims free from withholding from Federal, state or local taxes. A person must meet certain income, tax liability, and dependency criteria. This does not exempt a person from other kinds of tax withholding, such as the Social Security tax.
- Experience
A record of an employer's state unemployment insurance (SUI) account detailing charges, taxable wages and/or quarterly and other contributions. Experience is used to calculate the employer SUI tax rate.
- Experience Rate
The state unemployment insurance tax rate that is based on the amount of unemployment benefits paid out as a percent of total wages. The experience rate has been calculated to ensure that an employer has sufficient funds to cover future unemployment disbursements.
- Experience Rating
The calculation of an employer SUI tax rate, based on its ability to maintain a stable work force through a positive payroll history and minimizing benefit charges against its account. SIC codes are often utilized as a factor in the determination of an employer experience rate. (Also see: SUI,SIC)
- Experience Tax Rate
A method for determining the contribution rates of individual employers according to the factors specified in the State unemployment compensation code for measuring an employer's experience with respect to unemployment. After an employer has met the state's merit rating requirements an experience rate is assigned. Depending on the State, an employers eligibility for experience rating is based on the number of years it has been chargeable for unemployment benefits and/or liable for unemployment taxes. Most states will wait to assign the experience rate until the beginning of the next rate year; however, a few will assign a new rate as soon as the employer is eligible. (Also see: Benefit Ratio Formula, Benefit Wage Formula, Reserve Ratio Formula)
- FED ID
See FEIN
- Federal Employer Identification Number (FEIN)
The identification number assigned to employers by the Internal Revenue Service to control reporting and accounting functions. Some states will use the FEIN as the core for employer account numbers, but they are not interchangeable.
- Federal Income Tax (FIT)
A withholding tax levied against employees. The amount of withholding varies with the amount of earnings, frequency of pay, number of claimed exemptions, and marital status.
- Federal Information Processing Standard (FIPS) Cod
The code on a child support order that identifies the support agency receiving the payment.
- Federal Insurance Contribution Act (FICA)
FICA is a tax consisting of Social Security and Medicare taxes levied against employers and employees. Employers must match employee Social Security and Medicare tax contributions, using the same rate and taxable wage amounts.
- Federal Parent Locator Service (FPLS)
FPLS obtains employer and home address information from federal agencies. The service is operated by the Office of Child Support Enforcement in the U.S. Department of Health and Human Services and assists the states in locating persons responsible for making child support payments. It is also used in cases of parental kidnapping related to custody and visitation disputes.
- Federal Reserve Bank (FRB)
An independent agency of the U.S. government that plays a central role in monetary policy, the regulation of domestic payment systems (such as Fedwire and ACH), and the regulation of financial institutions. The FRB also acts as the fiscal agent for the U.S. Treasury.
- Federal Tax Deposit (FTD)
The Federal Tax Deposit consists of Federal Income Tax and Social Security/Medicare.
- Federal Unemployment Tax Act (FUTA)
Federal law first enacted in 1939, which sets guidelines for the administration of unemployment compensation programs. All liable employers pay a federal tax to fund administration of State and Federal unemployment insurance programs. These monies are also used to fund extended benefits. States must adhere to the minimum FUTA guidelines in terms of taxation and benefit administration but may set higher standards.
- Federally-Assisted Foster Care
A program funded in part by the federal government that enables a child to be raised in a household by someone other than his or her own parent.
- Fedwire
An electronic payment system that allows businesses to deposit tax payments using a same-day payment method. Fedwire is currently restricted to taxpayers who are mandated to use the Electronic Federal Tax Payment System (EFTPS). The process must be initiated by a financial institution.
- FEIN
See Federal Employer Identification Number.
- FICA
See Federal Insurance Contribution Act.
- Final Funds
Funds that cannot be recalled from the receiving bank using the wire collection method.
- FIPS Code
See Federal Information Processing Standard (FIPS) Code.
- Fiscal Year
Typically July 1 through June 30 generally, the federal government and some states use October 1 through September 30. (Also see: Calendar Year)
- FIT
See Federal Income Tax.
- FPLS
See Federal Parent Locator Service.
- FRB
See Federal Reserve Bank.
- FSDD
See Full Service Direct Deposit.
- FTD
See Federal Tax Deposit.
- FUTA
See Federal Unemployment Tax.
- FUTA Tax Return (Form 940)
Annual federal unemployment tax return filed during January of each year. The report calculates the total federal unemployment tax for the completed calendar year. The return details each SUI account number, corresponding taxable wages, tax rate and contributions made. To download 940 forms and filing information :click here
- Garnishment
Garnishment another term for lien. ADP also uses the term garnishment to describe one of the four lien types handled by WGPS. ADP processes regular garnishments (federal and state student loans) and creditor garnishments(for money owed to a hospital, department store, and other creditors)
- Genetic Testing
Analysis of inherited factors (usually by blood test) of mother, child, and alleged father, which can help to prove or disprove that a particular man fathered a particular child.
- Gross Wages
Total remuneration paid an employee before taxes and deductions.
- Group Term Life (GTL)
Employer- provided life insurance coverage. The premium for coverage in excess of $50,000 is taxable and must be reported as additional income on an employee's Form W-2.
- GTL
See Group Term Life.
- Guidelines
A standard method for establishing child support obligations based on the income of the parent(s) and other factors, as determined by state law.
- HR Partner
A PC-based payroll system offered by ADP.
- ID #
Tax Identification Number. See Employer Tax Identification Number (EIN).
- Immediate Wage Withholding
Automatic deductions from an employee's wages that start as soon as an agreement for child support is established. See also Wage Withholding.
- Impound
The process of withdrawing funds from a client's account and placing them into an ADP custodial account.
- Immediate Authorization to Charge
See Waiver.
- Independent Contractor
An individual, who is self-employed, and is free from the direction and control of an employer covered under state and federal unemployment laws. The Internal Revenue Service uses certain guidelines to determine the independent contractor relationship. Many states utilize the same guidelines. Upon termination of the independent contractor's services, the individual may attempt to collect unemployment benefits. The company should be prepared to prove to the state that the contracted individual was not an employee within the meaning of the law.
- Individual Retirement Account (IRA)
A tax-deferred retirement account that can be established by any employed person.
- Interim
Referring to periodic filings and deposits made during a quarter as required by some federal, state, or city agencies.
- Invoice
A document that notifies an ADP client of charges and credits to their bank account.
- Invoice Address
The mailing address where ADP Tax Filing Service clients want to receive their invoices.
- IRA
See Individual Retirement Account.
- IRS
Internal Revenue Service.
- JLN
See Jurisdiction Legal Name.
- Jurisdiction
The legal authority which a court has over particular persons and certain types of cases in a defined geographical area.
- Jurisdiction Legal Name (JLN)
The SIT/SUI legal name, or name that a state agency has on record, for a company that is different from a federal name. It is used for state deposits and filings.
- Key Account Manager (KAM)
An ADP associate responsible for answering questions and resolving inquiries for ADP's National Accounts clients.
- Leased Employment
See Employee Leasing
- Leave of Absence (LOA)
Official permission to be excused from work or duty.
- Legal Father
A man who is recognized by law as the male parent.
- Liability Date
The date an employer must begin reporting wages and paying taxes for unemployment insurance purposes. An employer should be clear as to the regulation of the states business is conducted in.
- Lien/Levy
An agency's legal action against the bank account or personal property of an individual or business in order to collect unpaid taxes. It is also a claim upon property to prevent sale or transfer until a debt is satisfied.
- Limited Power of Attorney (LPOA)
See Power of Attorney.
- Lived In
The city in which an employee resides.
- LPOA
See Power of Attorney.
- LOA
See Leave of Absence.
- Long Arm Statute
A law permitting one state to claim jurisdiction over an individual living in another state.
- Long Term Disability (LTD)
An employee benefit that pays partial or total medical wages to an employee on extended medical leave. See also 3PSP.
- LTD
See Long Term Disability.
- Medicaid Program
Federally funded medical support for low-income families.
- Medical Support
The legal provision for payment of medical and dental bills. It can be linked to a parent's access to medical insurance.
- Merger
Two or more related entities combine their accounts by filing articles of merger with the Secretary of State. The state unemployment agency must be notified of all mergers, acquisitions and divestitures.
- Merger / Acquisition / Divestiture Analysis
When a business transfer takes place through merger acquisition or divestiture some states allow the new company the option of transferring the experience rate of the Predecessor Company. Certain states require the transfer of experience. The transfer can be made in whole or in part dependent on state regulations and the scope of the business change.
This analysis compares the projected experience rate of the Successor Company with and without the combined experience of the merged company. If the transfer of experience is elected, the successor company is then liable for all unemployment benefit liability attached to the predecessor account. This analysis is to allow employers to elect the method that can create a savings opportunity.
Each state has unique regulations regarding experience transfer. Each state requires that the appropriate agency be notified of any business change. Many states will not allow a transfer if the sole reason for the change in status is a reduced unemployment tax rate. The employers involved must show that the transfer took place for valid business reasons. In addition, some states require a transfer if there is common ownership between the predecessor and successor employers. Common ownership may exist if the owners of each entity are related by blood or marriage. Also,if the same individuals have the controlling interest of stock or have controlling voting shares in both entities, common ownership may exist.
Many states have specific criteria for determining common ownership. In states in which a transfer of experience is optional, the employer has the opportunity to potentially save hundreds or thousands in unemployment tax dollars. To realize such savings, it should determine whether a transfer is more beneficial than retaining its current rate or if the successor is a new employer, whether the rate after a transfer is lower than the new employer rate.
- Merit Rating
Upon being qualified to do business in a state an employer will receive a state unemployment insurance (SUI) account number. States regulate a period of liability or chargeability in which an employer must serve to be a "qualified" employer. Once served, the employer will receive a rate based on its experience called the "merit" rate. (Also see: New Employer/Non-Merit Rate)
- Missouri Compensation (MO Comp)
A discount provided to employers for the timely remittance of income tax withheld from employees working in the state of Missouri.
- MO Comp
See Missouri Compensation.
- NA
Not Applicable.
- NAC
See New Account Coordinator.
- NACHA
See National Automated Clearing House Association.
- National Automated Clearing House Association (NAC
A banking industry trade association that promotes the rules and operating guidelines for electronic payments through the ACH Network. NACHA's members provide automatic debit and deposit service for companies and consumers.
- Negative Wage Chargeback
A charge reflected on an ADP Tax Filing Service invoice for tax credits taken for Negative Wages. Because some state agencies do not permit the reporting of negative wages for an employee, ADP changes the value to zero for reporting purposes and charges the employer for the reported payroll tax. Once an amendment is filed for the prior quarter, the employer will obtain a refund or credit from the agency.
- Negative Wages
Prior quarter adjustments to an employee's wages input in the current quarter and resulting in negative quarter-to-date (QTD) wages for an employee.
- New Account Coordinator (NAC)
An ADP associate responsible for coordinating the implementation process and paperwork for all new payroll clients.
- New Employer/Non-Merit Rate
In most cases, an employer newly subject to employment is assigned a new employer or non-merit unemployment insurance rate. Usually, this rate is fixed by legislation. It remains effective unless a legislative change increases or decreases the rate or until the employer has met the state's requirements to qualify for a merit rate based on its unemployment experience. In some states, new employer rates are based on the employers' Standard Industrial Classification (SIC) code. Employers in specific industries (such as: construction, mining or manufacturing) may be assigned a higher new employer rate, due to traditionally higher rates of unemployment in the industry. Also called a standard rate or starting rate.
- Nil
Refers to returns that are filed with no reported liability. Nil returns are required by some agencies to keep the employer's tax identification number active on the agency records.
- Nonprofit or Government Entities
Nonprofit organizations state and local government entities and political subdivisions are exempt from FUTA under Internal Revenue Code Section 501(c)(3) but are still covered by state unemployment laws. Organizations deemed exempt from FUTA under the Internal Revenue Code are generally allowed the options of either reimbursing the state unemployment fund dollar for dollar with the amount of benefits paid to former employees, or paying unemployment taxes in the same system as for-profit employers. Some state agencies require non-profit and government entities to utilize only the reimbursing method.
- Non-trust Asset
A non-custodial fund, such as Direct Debit of Fees.
- Non-sufficient Funds (NSF)
Referring to a bank account lacking the proper amount of funds to cover a debit; resulting in a monetary transaction that cannot be completed.
- NSF
See Non-sufficient Funds.
- OBC
See Official Bank Check.
- Obligation
Referring to the amount of child support to be paid by the responsible parent.
- Official Bank Check (OBC)
Checks drawn on a bank account maintained and reconciled by the providing bank.
- Offset
The amount of money taken from a parent's state or Federal Income Tax refund or other government-administered payment (e.g., unemployment insurance or state disability insurance) to satisfy a child support debt.
- Order
The ruling of a magistrate, judge, or properly empowered administrative officer.
- Other Compensation or Other Comp
Any additional earnings, other than wages, declared on an individual's annual tax document and reported on Form 1099. Some types of Other Comp can be included on an employee's W-2. Non-employees usually receive a 1099 rather than a W-2.
- P&I
See Penalty and Interest.
- PAD
See Pre-Authorized Draft.
- Paternity Judgment
The legal determination of fatherhood.
- Payroll Cycle
Refers to the length of time between payrolls. For example, if an employer processes payroll every week, each week is considered a new payroll cycle.
- Peg Balance
The minimum bank balance required for any given account.
- Penalty and Interest (P&I)
Agency assessments for late deposits and/or filings.
- Penalty Rate
Some states will assign a penalty rate-if an employer is delinquent in paying taxes or filing quarterly contribution and wage reports. The penalty rate is often as high or higher than the maximum rate. In some cases, an additional percentage is added to the originally assigned rate in lieu of a specified penalty rate.
- PIN
Personal Identification Number.
- Plaintiff
A person who brings an action, complaint, or suit in a civil case.
- POA
See Power of Attorney.
- Power of Attorney (POA)
A legal document authorizing ADP to act as agent for our clients when dealing with state and federal agencies. Without a valid Power of Attorney form on file, the agencies are not authorized to release information to any party other than the employer.
- PR
Payroll.
- Pre-Authorized Draft (PAD)
A document similar to a check used to debit taxes from an ADP client's bank account if the client's bank is not a member of NACHA, or if the account cannot be accessed through a NACHA electronic transaction.
- Pre-Note or Pre-Notification
A zero-dollar ACH transaction used to verify the accuracy of bank account information prior to automatic debits or credits, as in the case of direct deposit. The pre-note transmission serves as a notification to the bank of an ADP client or client's employee that actual ACH transactions will be processed against the account.
- Predecessor
The entity that existed prior to a partial or total transfer of a business.
- Public Assistance
Money granted from the Aid to Families with Dependent Children (AFDC) program to a person or family for living expenses. Eligibility is based on need.
- Purged
Refers to outdated information or records that are removed from ADP's systems.
- Quarter (QTR)
A three-month segment of a year, ending on March 31, June 30, September 30, or December 31.
- Quarterly Contribution and Wage Reporting
Tax report filed during April, July, October and January for the previous calendar quarter. Reported information for the quarter will include gross payroll, taxable payroll, non-taxable payroll, SUI tax rate and SUI taxes due. Certain states reporting will include or require information regarding supplemental taxes, surcharges, credits, penalties and monthly employee counts. The information reported is used by the state agency in determining future SUI tax rates and may also be utilized by the federal government for statistical purposes in labor reporting.
- Quarter-to-date (QTD)
Refers to values accumulated to date during a calendar quarter.
- QTD
See Quarter-to-date.
- QTR
See Quarter.
- RAF
See Reporting Agent File.
- Receivable
An outstanding balance due for services rendered.
- Reciprocity
An arrangement between taxing jurisdictions where a Lived In jurisdiction allows a credit for employee taxes paid to the Worked In jurisdiction.
- Recon or Reconciliation
A term usually referring to a quarterly or annual return which summarizes tax filings and deposits made during the quarter or year.
- Region
An individual ADP Employer Services processing office.
- Reimbursing Analysis
See Choice of Financing
- Remuneration
Any payments of wages, as defined by the state. Can include payment of regular wages, vacation pay, severance pay, bonuses and options. The definition of wages varies by state.
- Reorganization
Reorganization of a commonly owned entity may involve a company changing its federal identification number in whole; or rearranging the corporate structure by moving divisions or subsidiaries under a different federal identification number.
- Replacement Check
Issued to a client when a refund check is not received.
- Reporting Agent File (RAF)
Also known as the Representative Address File, this refers to the service bureau that deposits and/or files payroll tax returns on behalf of an employer. The federal government directs some inquiries, notices, and other written communication to both the employer and the service bureau.
- Representative Address File
See Reporting Agent File.
- Returned Item
The return of an ACH debit or Pre-Authorized Draft; or the rejection of a reverse wire transfer to ADP's bank. A returned item is a result of a bank's failure or refusal to honor the charge presented, or the inability of the depository bank or the federal system to process the item because of erroneous information.
- Reversal
Any ACH entry or file that is sent within the required deadlines to correct or reverse an erroneous entry or file.
- Reverse Wire Transfer
See Wire Transfer.
- Revised Rate
A rate issued when any factor of the original rate determination is modified. Examples of modification include a discrepancy in calculation of taxable payroll, contributions, benefit charges, account balance and reserve or benefit ratios.
- SDI
See State Disability Insurance.
- Seasonal Company
Companies, such as summer camps and farms, that do not process payrolls in every quarter of the calendar year.
- Settlement Date
The date the Federal Reserve Bank records an exchange of funds.
- SIT
See State Income Tax.
- Social Security/Medicare (SS/MED)
Referring to the requirement by the Federal Insurance Contribution Act that employers and employees to contribute to retirement, medical, and disability insurance. The combined (FICA) rate is withheld from employee wages up to a set taxable limit and matched by a required employer contribution.
- SOD
See Statement of Deposits and Filings.
- Sole Proprietorship
The singular owner of a business.
- SPLS
See State Parent Locator Service.
- SS/MED
See Social Security/Medicare.
- Stale Dated Checks
Checks that have not been negotiated within a specified time limit.
- Standard Industrial Classification Code (SIC)
Each employer, upon application for a federal employer identification number (FEIN) is assigned a SIC number. The Standard Industrial Classification was developed for use in the classification of businesses by type of activity in which they are engaged as a way to promote uniform collection of data at the federal level. SIC codes are based upon the primary activity or output that a company is engaged in.
- State Disability Insurance (SDI)
Referring to a state-established compensation plan for the support of employees unable to work due to an illness or injury. Some states require employee and employer (EE/ER) contributions to a disability insurance fund for payment of SDI benefits.
- State Income Tax (SIT)
A withholding tax deducted from an employee's wages as required by a state.The amount of withholding varies with the amount of earnings, frequency of pay, number of claimed exemptions, and marital status.
- State Parent Locator Service (SPLS)
A service operated by state Child Support Enforcement agencies to locate absent parents in order to establish paternity, and to establish and enforce child support obligations.
- State Unemployment Insurance (SUI)
A quarterly tax paid to a state unemployment agency. An experience rate assigned to the employer and a taxable wage limit established by the agency determine the amount of the tax due. The SUI tax can be paid by the employee (SUIEE) or paid by the employer (SUIER) or both - depending on the state's rules.
- State Unemployment Insurance Identification
The identification number assigned to employers by the state agency to control unemployment related reporting and accounting functions. The number will not be that same as the FEIN issues by the federal government, however, several states do use the FEIN as core to the SUI. To download a SUI application
click here
- Statement of Deposits and Filings (SOD)
Quarterly and annual documents provided to ADP Tax Filing Service clients. SODs summarize filings and deposits made by ADP on a client's behalf to authorized jurisdictions.
- Status Change
A change in the type of Tax Filing Service ADP provides to clients. The change affects ADP's quarterly and annual depositing and filing responsibilities.
- Subject To
Typically referring to wages or compensation that are liable to taxation.
- Subsidiary
A separate business entity filing reports under state and federal account numbers-different than those of the parent company. (Also see: Division)
- Successor
The remaining entity, after a partial or total transfer of business.
- SUI
See State Unemployment Insurance.
- SUI Exempt
Some nonprofit employers are excluded from paying State Unemployment Insurance tax. Exempt employers are not required to file any quarterly returns or Employee Wage Detail Reports.
- SUI Less FUTA
Used to refer to cases where the employee wages are exempt from State Unemployment Insurance (SUI) taxes, but not from Federal Unemployment (FUTA) taxes. When SUI taxable wages are less than FUTA taxable wages, the employer is liable for the full FUTA tax rate on the exempt wages.
- SUI Reimbursable
The status of nonprofit organizations or employers with a history of few unemployment claims. Instead of quarterly contributions, the employer reimburses the state agency for unemployment claim benefits paid to former employees. These employers are required to file quarterly Wage Detail Reports with the agency.
- SUI Surcharge
An additional temporary fee assessed by a state unemployment agency in order to pay back loans from federal unemployment funds or to replenish low state unemployment funds.
- Sundry
Small amounts (less than $2.00) which are written off rather than charged or credited.
- Surcharges
Contribution assessments made to finance training, health care and administrative costs. Certain states also maintain special funds for the possibility that the states' unemployment trust fund may become insolvent.
- Tax
In the context of ADP's Tax Filing Service: The actual monies ADP withholds from an employee or employer that are due to a tax agency.
- Taxable
The actual amount of wages or compensation that are subject to a tax type and used to calculate the tax due.
- Tax Rate
The unemployment tax rate assigned to an employer by the state agency. The rate multiplied by taxable wages is the amount of quarterly contributions owed by an employer.
- Tax Rate Analysis
This analysis compares the tax rates of two or more years. The tax savings/loss is calculated for the current year or the cumulative of two or more years.
- Tax Rate Notice
Annual report issued by the state agency showing the unemployment tax rate assigned for the year period. Most states utilize a calendar year period while a small number utilize a fiscal year period.
- Tax Service
An ADP tax filing service offered primarily to businesses with more than 1,000 employees who process their payroll in-house or use ADP for only a portion of their payroll processing.
- Teledata
A service enabling ADP payroll clients to phone in their payroll information to ADP operators for processing.
- Tentative Credit
The credit applied when State Unemployment Insurance (SUI) wages are less than Federal Unemployment (FUTA) wages.
- Third Party Sick Pay (3PSP)
Third Party Sick Pay (3PSP) is a disability insurance benefit that provides employees with partial or full wage benefit payments while on long-term medical leave. The payments are made to employees through an insurance company, union plan, or a state temporary disability plan instead of through their employer.
- TotalPay
ADP's payroll payment package that includes ADPCheck and FSDD.
- Total Tax
An ADP service that assists employers in responding to unemployment benefit claims and controlling agency-assigned SUI experience rates.
- Total Tax Plus
An ADP service that assists employers in responding to unemployment benefit claims and controlling agency-assigned SUI experience rates.
- Tracer
An agency or client inquiry being researched and resolved by ADP.
- UCM
See Unemployment Compensation Managementsm.
- UIFSA
See Uniform Interstate Family Support Act.
- Unemployment Compensation Management
An ADP service that assists employers in responding to unemployment benefit claims and controlling agency-assigned SUI experience rates.
- Unemployment Compensation Services (UCS)
A comprehensive service designed to manage the unemployment compensation process, thus, eliminating unnecessary claims and costly premium overpayments. (Also see: Total Tax, Total Tax Plus, and Unemployment Compensation Management)
- Uniform Interstate Family Support Act (UIFSA)
A national support law eliminating the possibility of two or more valid (and possibly conflicting) child support orders existing in different states for the same child. UIFSA allows the child's home state to obtain personal jurisdiction over the non-custodial parent (to the extent permitted by the Constitution).
- Uniform Reciprocal Enforcement of Support Act (URESA)
A state law that provides a mechanism for establishing and enforcing support obligations when the non-custodial parent lives in one state and the custodial parent and child (or children) live in another.
- URESA
See Uniform Reciprocal Enforcement of Support Act.
- Visitation
The right of a non-custodial parent to visit or spend time with his or her children following separation or divorce.
- Voluntary Contribution
Additional monies paid into an employer experience rated SUI account, other than quarterly payments. A voluntary contribution can allow the employer to obtain a more favorable tax rate. In most states the contribution will increase the reserve balance of the account while other states credit the contribution to erase previous charges. Nearly half of the states allow employers to make a voluntary contribution payment to their experience rated account. From year to year, additional states may also allow a voluntary contribution.
- Voluntary Plan Disability Insurance (VPDI)
A state option allowing an employer and/or individuals to purchase private disability insurance in place of a State Disability Insurance (SDI) plan. The employer or an insurance carrier administers this private insurance.
- VPDI
See Voluntary Plan Disability Insurance.
- W-2
A statement of an individual's annual wages and taxes provided by an employer that must be included with the employee's federal, state, and city income tax returns.
- W-3 - Transmittal of Income and Tax Statements
A form summarizing a company's total wages and tax withholdings. The W-3 accompanies a W-2 statement and is to be filed with the Social Security Administration.
- W-4 - Employee's Withholding Exemption Certificate
A government form used to indicate the number of personal exemptions an employee wishes to claim.
- Wage Claim Penalty
A penalty assessed by a State Unemployment Insurance (SUI) agency when an employer fails to provide a timely response to an unemployment claim.
- Wage Detail
Typically referring to the Employee Quarterly Wage Detail Report which must be filed with SUI returns and some returns for cities or localities.
- Wage Garnishment Processing Service
An ADP value-added service that automatically prioritizes, calculates, and deducts employee wage garnishments and disburses them to the appropriate payee.
- Wage Withholding
An automatic deduction of all or part of an employee’s wages to pay some debt or financial obligation such as child support. Wage withholding can be voluntary or involuntary
- Wages
Employee earnings.
- Waiver
Referring to the authorization a client gives to ADP to debit additional taxes from its bank account with no waiting period. This is also called Immediate Authorization to Charge.
- WGPS
See Wage Garnishment Processing Service.
- Wire Transfer
A special banking arrangement that enables an ADP client to transfer monies for tax liabilities directly to ADP's Tax Impound Account. A reverse wire transfer is where ADP initiates the request to the client's bank to debit the client's account. A direct wire transfer is where the client initiates the request.
- Worked In
The city in which an employee works.
- Year-to-Date
Values accumulated to date for a calendar year.
- YTD
See Year-to-Date.
- Cafeteria Plans
A plan that offers flexible benefits under the Internal Revenue Code Section 125. Employees choose their benefits from a "menu" of cash and qualified benefits,offered by an employer. some of which can be paid with pretax deductions from wages.
Benefits that may be offered under a cafeteria plan include accident and health insurance, dependent care assistance, group legal services, group term life insurance (although life insurance in excess of $50,000 is includible in gross income), and additional vacation days.
- Compliance
Referring to compliance with any federal, state or local laws regarding taxes and dealings with employees
- Circular ‘E’
Federal employer’s tax guide. Changes each year and states current federal tax and deposit rules as well as rates.
- Section 125
IRS section setting forth rules & regulations regarding pre-tax deductions for some insurance premiums, un-reimbursed medical expenses and child/dependent care.
- Deferred Compensation Plan
Deferred compensation plans are employee benefit plans, authorized by various Internal Revenue Code Sections, under which employees may contribute a percentage of wages to tax deferred savings plans rather than receive the amounts as current compensation. The most commonly used deferred compensation plan is the 401(k) plan (so named for its IRC section).<br>
Employee contributions to 401(k) plans are exempt from federal income tax and, in some states, state income tax, withholding but are not exempt from FICA withholding. Employer contributions, made on behalf of the employee, are also exempt from federal income tax withholding. Contributions and earnings thereon accumulate tax free until distributed to the employee at retirement.
The maximum amount that an employee can elect to defer for 2000 under a 401(k) plan in which the employee participates is $10,500. The limit is adjusted annually for inflation. The amount that an employee may actually defer, however, is usually lower as typical plan terms limit contributions to the lower of a specified percentage of current wages or the statutory maximum.
No special permission is required from the IRS to implement a 401(k) plan but the regulations surrounding these types of plans are so voluminous and complicated that a qualification ruling is usually sought.
Deferred compensation plans have strict requirements as to eligibility, participation, vesting, nondiscrimination, withdrawal of funds, and annual reporting and legal advice should be sought in their institution.
- EVS
Employee Verification Service (EVS). The service will match your record of employee names and Social Security numbers (SSN) with SSAs records before you prepare and submit Forms W-2 (Wage and Tax Statements). Making sure names and SSNs entered on the W-2 match the Social Security Administrations records is important because unmatched records can result in additional processing costs for you and uncredited earnings for your employees. Uncredited earnings can affect future eligibility to (and amounts paid under) SSAs retirement, disability and survivors program. EVS can help eliminate this common reporting error.
For more information click here.
- 403(b) Annuity
An annuity or mutual fund that provides retirement income for employees of public schools and certain tax exempt organizations.
- Advance Earned Income Credit (AEIC)
Payments of earned income credit during the year to employees who expect to be eligible for the credit. Employers make the payments out of federal income, Social Security and Medicate taxes withheld from the employees’ wages.
- Accrual
The recognition of assets, expenses, liabilities or revenues after the cash value has been determined, but before it is transferred.
- After-Tax Deduction
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).
- Compensatory Time
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 certain public sector employees (e.g., police officers and firefighters).
- Immigration and Naturalization Service (INS)
Federal agency charged with enforcement of United States Immigration laws.
- Magnetic Media Reporting
Use of a computerized method of filing information with government agencies, such as magnetic tape, diskette, cartridge, or electronic filing from one computer to another.
- Medicare
Used to provide medical benefits for certain individuals when they reach age 65. Workers, retired workers, and the spouses of workers and retired workers are eligible to receive Medicare benefits upon reaching age 65.It is funded through the hospital insurance component of FICA. Employer and employee pay matching amounts; no annual wage limit.
- Net Pay
That part of an employee’s wages that remains after all deductions have been subtracted (taxes, health insurance, benefits, etc.)
- Withholding Rate
Total percentage of withholding for a taxing jurisdiction.
- Local Withholding Rate
Total percentage of withholding for a taxing locality.
- Local Tax Rate
Percentage of withholding for a locality.
- School Rate
Percentage of withholding for a school district.
- Employee
An individual performing services for an employing unit, as defined by state law, under a master/servant or employer/employee relationship.
- Taxable Fringe Benefit
The value of certain noncash fringe benefits received from an employer
is considered part of an employees compensation. An employer generally must
withhold income tax on these benefits from an employees regular pay for the
period the benefits are paid or considered paid. For moreinformation on taxable fringe benefits, see Fringe Benefits under Employee
Compensation in Publication
525.
- Imputed Income
The addition of the value of cash/non-cash compensation to an employees’ taxable wages in order to properly withhold income and employment taxes from the wages.
- PIT
Personal Income Tax
- ETT
Employment Training Tax
- OASDI
Old Age Survivor and Disability Insurance
- Nonexempt Status Employee
If you are a "nonexempt" employee, generally you are protected by the wage and
hour laws of your state, or of the Federal government (Fair Labor Standards Act).
Wage and hour laws require employers to pay at least a certain minimum hourly wage rate
and a premium rate for "overtime" work. They are also a guide for determining
which on-the-job hours constitute "work," and thus must be compensated.
- Full Service Direct Deposit
An ADP banking service that enables employers to deposit their employees' wages directly into banks accounts using ADP partner banks.
- Flexible Spending Account
A plan in which your employer reduces your earnings to pay for your enhanced medical insurance coverage or child care. Under this plan, you receive medical insurance and child care tax free.
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