Overview: A growing employer trend over the past several years has been to integrate payroll within the HR department. So, now more than ever, HR managers need to understand all the complex issues and requirements involved in payroll tax law compliance in order to effectively oversee payroll processing and ultimately avoid costly penalties. This involves managing the following tasks, among many others:
Trends: The following are just a few of the important issues that will have an impact on payroll in 2014!
Author: Rena Pirsos, JD, Legal Editor
A federal district court has granted a request by the State of Texas to temporarily block implementation of a final Department of Labor (DOL) regulation requiring Family and Medical Leave Act (FMLA) benefits to be extended to same-sex couples legally married in a state that recognizes such marriages, even if they live in a state that does not recognize such marriages. The final regulation would have gone into effect today if not for the stay granted by the court.
To help employers comply with employees' child support withholding orders, the federal Office of Child Support Enforcement (OCSE) has issued updated information regarding the process of lump-sum payment reporting and the states that now use the electronic income withholding order (e-IWO). The OCSE has also released a report on its 2014 Employer Symposium.
The Supreme Court has set April 28 as the date it will hear arguments that could decide the fate of same-sex marriage nationwide. The Court will hear four consolidated cases in Obergefell v. Hodges involving same-sex marriage bans in Michigan, Ohio, Kentucky and Tennessee.
An employee who receives sick pay - long-term or short-term disability pay - from an employer or a third party, such as an employer's agent or an insurance company, is required to pay Social Security and Medicare (FICA) taxes on the amounts received. Federal income tax withholding is mandatory or voluntary, depending on the payer. Although sick pay is taxable to the employee, and the employer must pay its matching share of FICA taxes, the employer and the third party may transfer liability between themselves for withholding, depositing and reporting the taxes attributable to the sick pay. Third-party sick pay is reported on Form 8922, Third-Party Sick Pay Recap, under certain circumstances. This How To explains to employers how reporting of third-party sick pay to the IRS is handled.
Employers must withhold federal income taxes from employees' pay every pay period. Employers that use automated payroll systems may find that the annualized wages method of withholding is more accurate than other withholding methods. This How To guides employers on using the annualized wages method of withholding.
Employers must withhold federal income taxes from employees' pay every pay period. Certain employees, such as commission salespeople, may be overwithheld if their employers use the regular percentage method tables, without adjustment for the seasonal nature of employees' jobs. This How To guides employers on determining withholding using the cumulative wages method.
Employers must withhold federal income taxes from employees' pay every pay period. The IRS has developed several methods employers can use to fulfill this duty. This How To shows employers how to withhold using the percentage method withholding tables published by the IRS.
Employers must withhold federal income taxes from employees' pay every pay period. Certain employees, such as employees who start work in the middle of the year or who work for only a short time during the year (e.g., college students working during the summer), may be overwithheld if their employers use the regular percentage method tables, without adjustment for the part-year nature of their jobs. This How To guides employers on determining withholding using the part-year employment method.
Ensuring that the proper amount of income taxes is withheld from employees' pay may be difficult for employers that have employees whose pay varies pay period to pay period (e.g., employees receive overtime). This How To guides employers on determining withholding using the average estimated wages method.
Employees often receive supplemental wages, which are taxable and subject to income tax withholding, FICA, and FUTA. For employees who receive up to $1 million a year in supplemental wages, employers have several different withholding methods from which to choose. This How To shows employers how to withhold on supplemental wages under the aggregate method.
HR and legal considerations for employers regarding payroll.