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Editor's Note: Keep up to date with constantly changing payroll tax laws and trends!

Rena PirsosOverview: HR managers need to understand 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:

  • Preparing paychecks, which involves calculating employees' gross salary and the amounts to be deducted and withheld from those earnings for federal, state, and local taxes, various health and welfare benefits and for involuntary and voluntary income withholding orders;
  • Determining the proper method(s) for paying employees, e.g., direct deposit, paper checks or payroll debit cards, based on federal and state wage payment laws;
  • Periodic depositing and reporting of withholdings with government agencies; and
  • Recordkeeping.

Trends:

  • The Protecting Americans From Tax Hikes Act of 2015 accelerated the due date for filing each employee's Form W-2, Wage and Tax Statement, with the Social Security Administration to January 31 (from March 31), whether an employer files paper forms or files the forms electronically. January 31 is also the date by which employers must provide copies of the forms to all current employees and former employees who worked for the employer during the previous year. Many states have also accelerated their electronic filing deadlines for state copies of W-2s to conform to the earlier federal filing deadline.
  • In addition, many states also require an employer to file an annual reconciliation return by January 31. And, in the past few years, many of these states have also lowered the threshold number of employees that triggers the requirement to file the forms and annual reconciliations electronically.

Author: Rena Pirsos, JD, Legal Editor

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HR and legal considerations for employers regarding payroll.

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