Payroll Glossary - E

Early Retirement Age: 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.

Earned Income Credit (EIC): A tax credit that is available to low-income employees. It may be taken when the employee files his or her individual tax return, or partially paid in advance by the employer during the year.

Economic Growth and Tax Relief Reconciliation Act of 2001: Significant tax cut legislation enacted in 2001 that reduced income tax rates and increased pension plan elective deferrals.

EDI: Electronic Data Interchange.

Educational Assistance Program: An employer plan providing for payment or reimbursement of an employee's educational expenses.

EEOC: 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.

EFT: Electronic Funds Transfer.

EFTPS: Electronic Federal Tax Payment System.

EFTPS-Direct: An electronic tax payment method that allows employers to access the Electronic Federal Tax Payment System by computer or phone to report its employment tax deposit information.

EFTPS-Online: An EFTPS-Direct payment option that allows employers to deposit taxes, monitor the sta- tus of current deposits, and check their recent payment history over the Internet.

EFTPS-Through a Financial Institution: An electronic payment method where an employer instructs its financial institution to originate a federal tax deposit through the ACH system to the US Treasury.

EGTRRA: Economic Growth and Tax Relief Reconciliation Act of 2001.

EIC: Earned Income Credit.

EIN: Employer Identification Number.

Elective Deferral: 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) in the employee's behalf, also known as pretax contributions or employer contributions.

Electronic Federal Tax Payment System (EFTPS): System that allows employers to make federal tax deposits electronically through the ACH network.

Electronic Filing: The process of filing tax and information returns directly from one computer to another.

Electronic Funds Transfer (EFT): The transfer of money electronically from an account in one financial institution to an account in another financial institution (see Direct Deposit).

Electronic Tax Application (ETA): The term for the same-day settlement procedures for electronic tax deposits made through the Electronic Federal Tax Payment System.

Employee: An individual who performs services for another individual or an organization in return for compensation. See also .Common Law Employee. and .Covered Employees..

Employee Business Expenses: 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.

Employee Retirement Income Security Act of 1974 (ERISA): Federal law regulating the operation of private sector pension and benefit plans.

Employee Self-Service: An application that gives an employee access to personal and company data and allows the employee to review, print out, and/or update certain portions of that data. It can be accom- plished by phone, at a centralized computer workstation, or on individual personal computers. To learn more about Employee Self Service

Employee Stock Purchase Plan (ESPP): An employer plan under which all employees are given the opportunity to buy the employer's stock at a discount, subject to strict limitations.

Employee Verification Service (EVS): A service offered by the Social Security Administration allowing employers to verify the accuracy of their employees. social security numbers by sending in a paper listing, magnetic tape or diskette of their data for review by the SSA.

Employee's Withholding Allowance Certificate: The federal Form W-4 or an equivalent state or local form on which the employee states the number of withholding allowances thr employee claoms. The form is used by the employer to determine the amount of federal, state, and local income taxes to withhold from the employee's compensation.

Employer: 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.

Employer Identification Number (EIN): The employer's account number with the Internal Revenue Service, it consists of nine digits (00-0000000).

Employer's Supplemental Tax Guide: 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 sick pay taxation and reporting.

Employer's Tax Guide to Fringe Benefits: IRS Publication 15-B. This publication provides detailed information for employers on fringe benefits that are excluded from employees. income, as well as the valuation, taxation, and reporting requirements for taxable fringe benefits.

Employment Tax Efile System: The IRS's electronic filing system for Forms 941 and 940.

Employment Verification: The process of determining whether a newly hired employee is authorized to work in the United States under the Immigration Reform and Control Act.

emTRAC: Employer's Tip Peporting Alternative Commitment.

Enterprise Coverage: 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.

EPA: See Equal Pay Act.

Equal Pay Act (EPA): 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.

ERISA: Employee Retirement Income Security Act of 1974.

Escheat: In the context of payroll, the turning over of unclaimed wages to the state after a period of time determined by state law.

ESPP: Employee Stock Purchase Plan.

ETA: Electronic Tax Application.

EVS: Employee Verification Service.

Excess Deferral: The amount of an employee's deferred compensation that exceeds the IRS's annual contribution limit.

Exempt Employees: 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, overtime pay, and certain record keeping requirements of the Federal Wage-Hour Law.

Exercise Price: The price an employee pays for a stock when a stock option granted by an employer to an employee is exercised by the employee.

Expatriate: For United States payroll purposes, a United States citizen or resident alien who lives and works outside the United States.

Experience Rating: In the context of unemployment compensation, it is the employer's past record of unemployment claims activity. This past record is used to as part of the determination of the employer's unemployment tax rate (i.e., the higher the turnover rate, the higher the tax rate).

Extended Benefits: Unemployment benefits paid beyond the normal 20 or 26 weeks allowed by most states (authorized by federal legislation).

External Audit: An audit of an organization's financial statements by a disinterested third party (e.g., an outside CPA or CPA firm