Happy Holidays

I just wanted to wish all my readers a very Merry Christmas and a wonderful New Year.  Enjoy it while you can because Year-End starts on January 2nd.

I will be blogging almost daily in January. I will be using that time to post Year-End reminders and helpful hints to assist in making your Year-End goes as smoothly as possible.

Enjoy your holidays and I will see you in January

Veteran's Day

I want to take a moment today to thank all the veterans for their service.  My family has a long history with serving in the military.  My Grandfather served in WWI in the Army and is actually buried in Rosecrans Cemetery down in San Diego.  My Father, Harold Frank Jaster served for 28 years in the Marine Corps.  WWII( winner of the Silver Star), Korea, and 3 times to Vietnam.  He went once for his own tour, once to keep each of my brothers from going.  His ashes were spread at sea.  His last wish.  He wanted to make a Navy ship work at least for one day.  You Navy personnel and Marines will understand that sentence just fine.

My Mother served as a woman Marine during WWII and she and my father were married right before she was discharged.  Their wedding picture (is on my Facebook page) is in their uniforms. 

My oldest brother served in the Army and was the clerk for the Fife and Drum Corp in Arlington.  So he is a Vietnam Era vet.

My husband served in the Air Force for four years.  He is also a Vietnam Era vet. That's how we met.  I was on base at Nellis here in Las Vegas back in my young, good looking days and we bumped into each other.  That was 37 years ago.

When my father remarried he married another woman Marine.  This time an officer and a future lawyer.  We did lament where we went wrong but accepted her none the less. She ended up a Colonel in JAG.  And no it is nothing like the TV show according to her.

Did I ever serve?  No.  I wanted to but back then the only job for women was a clerk.  And until they invented computer key boards I could not type.  So I was a daughter and a wife of a service person.  Which in itself is a  tough life and they deserve  respect as well.

So thanks to all our veterans for serving so unselfishly then and now.  May you be protected from harm and your mission successful.  We are thinking of you today. 

And to give this a payroll slant--all I can say is you do not get paid enough for the job you do keeping this country safe! 

Update for November

Well this has certainly been an interesting time since last I blogged on October 13th.  I do apologize for not coming more to the site but you will understand when I explain what has been happening. I have always said that payroll is a constantly changing profession and field.  And boy have I experienced it in the past few weeks.

I have been working under the same writing contract for 17 years.  First it was ProPub out of New Jersey.  This was my first publisher.  The man who owned it contracted with me to write a payroll manual that could be updated twice a year.  But because of the contract I was extremely limited with whom I could write with until either ProPub or I decided to no longer do the manual.  But things changed.

ProPub didn't decide not to do the manual--they were sold to a company called IOMA in 2000.  So now my publisher was IOMA.  Same contract, same rules still could only write for them.  But I did profit from this change.  Even though I couldn't write books for other publishers IOMA kept me very busy.  Not only was I the author of the Complete Guide to Federal and State Payroll Compliance but also the editor for the Payroll Manager's Report (PMR) and  a contributing writer for the Payroll Practitioner's Monthly(PPM).  And every time IOMA needed a report for payroll I was there go-to guy. And they also published my Garnishment Guide on the side.  Plus they were a great client for my webinars.  Booking sometimes 20 a year. Not a bad relationship for me.

But things change, IOMA was sold to BNA a couple of years ago.  No changes really happened in terms of my services for them but they were definitely in the wind.  Then in February of this year things change--IOMA was out and BNA was in.

This one wasn't so good for me.  In June they announced they were no longer publishing my version of the Complete Guide.  They were bringing it "in house".  And now for my not being able to blog for a while.  I got a notice from the bankruptcy court that the corporation that owned IOMA had declared bankruptcy.  That explains all the sudden changes but I knew it also spelled the end of my relationship with them.  I had guessed it would be on October 31st.  I missed it by 2 days.

On November 2, the attorneys for BNA sent me an e-mail terminating all my services.  No more editor for PMR, no more articles for PPM, no more webinars.  Yes things change and sometimes they don't seem like they are for the better.  But this one just might be.

Because I am no longer under their contract for the book and the content of the book reverts back to me I am now free to do exactly what I want in terms of writing payroll manuals, books and articles.  And also what I say and do on this blog. 

So look for some really interesting blogs from this point forward.  As to my books and manuals I will be cranking those out.  Currently I am in the process of completing my first new one in years.  It will be for Nevada payroll professionals and businesses.  Look for it at the end of January.

The next book will be for my payroll professionals in California.  And of course I will be updating my garnishment guide for 2011.    All the while I will be maintaining the most up-to-date and extensive payroll website for payroll professionals.  All the latest news and information, newsletters, bulletins, research facilities and of course advice from me--the Payroll Advisor!

The Times They Are a Changin'

A Busy September but Productive

Well I am back.  It has been a very hectic September.  My website is coming along nicely.  We are building up the Payroll Resource Collection and should have it all built by the end of the year.  So for now we are offering free access to this valuable collection until December 31st.  Just sign up on our website.

Not only have I been busy but so has Congress, the IRS and even some of the states. Let's review what has happened so far.

1. Good news for company cell phone users.  The Small Business Jobs Bil of 2010 signed by President Obama on September 27th.  The bill removes cell phones from the definition of Listed Property in the Internal Revenue Code.  It is effective for tax years after December 31, 2009.  This means that the heightened substantiation  requirements do not apply to cell phones. 

2.  Bad news in the same bill for employers who are late or who fail to provide informational returns.  The penalties have been increased.  First Tier goes from $15 to $30 and the calendar year maximum increases from $75,000 to $250,000.  A complete recap of the penalties are on my website.

3. IRS is putting off mandatory reporting on Form W-2 for health insurance and making it optional for 2011.  This is to allow businesses--read that payroll departments--time to adjust systems to allow for the new requirement.  Read the entire news report on our website under IRS News.

4.  States are beginning to announce new minimum wages for 2011.  Missouri will remain unchanged for 2011.  Montana is going up to $7.35.  Ohio is going up to $7.40 for non-tipped employees and $3.70 for tipped if tips including. Oregon is going to $8.50.

5. States are beginning to announce tax changes as well.  Oklahoma is requiring all SUI reports to be filed electronically in 2011. Iowa tax tables will remain the same in 2011.

So now we begin the year end hectic rush of news for payroll.  I will keep you updated on the blog. If you need to receive news of new minimum wages etc as it breaks sign up for our news bulletin.  We send out an e-mail blast as each news item is announced by the source.   See my website for details and to sign up.

Payroll Benchmarking --Best Practice

I have been finishing up my latest project this week.  The benchmarking report for my publisher.  It is a lot of work but really an enjoyable venture.  It is very interesting to see all of the statistics on the costs etc associated with payroll just laid out to review at my leisure.  When I was first working full time in payroll I would have killed to see some of these numbers.  But back in those days no one had heard of benchmarking. So I had to guess how well I was doing.  There was nothing to compare it to.

But it wasn't really necessary to benchmark back in those days either.  Since we only paid by check or cash, had only a few fringe benefits--no 401(k) or cafeteria plans, and very few garnishments what was there to benchmark.  All anyone cared about is that I got the payroll out on time.  Compliance wasn't even an issue with the company--just me!  Just get it out on time, don't make too many mistakes or tick any of the employees off and they were satisfied.

But times certainly have changed.  Now they want you to get it out on time, don't make too many mistakes, don't tick off any employees, keep in compliance (still not as strict as it should be), and on top of all that--keep the costs down.

So today I guess my suggestion for a best practice is to check out how well you are doing.  Think about adding benchmarking to your project list next year.  You will find places to save costs, improve functions and processes and maybe even impress the bosses.  Who knows, might even surprise yourself at how well you are doing.

How many out there are benchmarking already?  Let us know what you have found.

New Forms are Everywhere These Days

It amazes me sometimes how the world of  payroll goes in cycles.  For years we use the same old forms--941, DE 6 and DE 7 in California, etc.  Then suddenly everyone is bored or something and new forms start popping up.  Remember when the 941 had nonpayroll related stuff on it?  They broke that out with the 945.  Then smaller employers got the 944.  Then the 941 stayed the same for quite a while year in and year out the same lines with the same things until last year.  Then we got 2 forms in the same year last year and then again this year and it will be changing again next year.

Well now CA is doing the same.  They are changing quarterly returns starting in January of 2011.  Gone is the lovely DE 6 and the equally as lovely DE 7.  Now we will have the DE 9 and the continuation DE 9C. Note: For more details on what each form does see our website under State News.  It just seems that as soon as you get complacent knowing all the forms you have to submit along comes a new one.

Oh well, at least it gives me something to write about anyway.

IRS Proposes Paperless in 2011 and I agree

The IRS issued a news bulletin last week that it is proposing that all deposits for taxes be done by electronic funds transfer or EFT.  The IRS has long had a reliable system in place for making deposits via EFT and I for one think it is about high time they went paperless.  There is no reason to keep paying clerks etc to handle paper when it can be done quickly and cleanly with far less "human error" on the side of the IRS.  Most of the country is use to using electronic methods for deposits or withdrawals or information.  Those that aren't can catch up with the rest of us, which they should anyway.

So to the IRS I say bravo!  Go 100% paperless deposits in 2011 and move the government into the 21st century with the rest of us.

What do you think?

Just a quick note, I will not have a blog for tomorrow or Thursday.  I have a family medical procedure to attend to and will return on Monday.

Our New Website is Up and Running at Last!

Our new website at www.thepayrolladvisor.com is up and running at full strength now.  Please check it out when you can.  We have put the latest news on the home page with links to the stories for your convenience.  The news will be updated as items come across my desk.  If you hear of a news story but don't see it on our home page let me know at payrolladvisor@cox.net and we will research the item.

We will be covering the latest news from the IRS, Department of Labor, Social Security Administration and all 50 states.  So whether it is the new tax amnesty program in Kansas, going paperless at the IRS in 2011 or giving the IRS a comment on the Form W-11 you will find it in our "Latest Updates" section.

To save time be sure to sign up for our free news bulletin.  We issue the news bulletin whenever a story breaks so you don't get dozens of e-mails a day with some trivial story and 10 columns of advertisement.  We issue the news bulletin when we have information to send. So you may get one on Tuesday but not again until the following Monday.  We want to make sure you have the latest news but not be bothered otherwise. You have a payroll to get out and we know that. So sign up now at www.thepayrolladvisor.com and tell all your friends.

The IRS is Asking for Comments---Are You Giving Them?

In my news bulletin for my subscribers and on my Facebook page today I covered the announcement by the IRS that they are seeking comments on the Form W-11.  The Form W-11, Hiring Incentives to Restore Employment (HIRE) Act Employee Affidavit was created to be used as a template for employers who must collect affidavits from qualifying employees.  It was for the convenience of the employer only and the form is not submitted.  So the IRS wants to know how the form is working. This type of request for comments is very common for the IRS and payroll is not taking full advantage of the opportunity to be heard.

Payroll professionals need to take the time to respond to these comment requests.  Even if you like the form and can only write a few lines.  The more the IRS hears from individual payroll professionals the more credibility we will have with them and that upgrades our profession. Generally, most of the time the IRS will hear from attorneys or similar agents of employers, or organizations such as the APA.  But what we really should be doing is not relying on the American Payroll Association to give "their" opinion on what payroll likes but give our own opinion.

Our opinions are valuable and they need to be heard.  But they can't be heard unless we take the time to submit them.   So let the IRS know how you feel about Form W-11.  Send your comments by October 12th to:  Gerald Shields, Internal Revenue Service, Room 6129, 1111 Constitution Avenue, NW., Washington, DC 20224.

I will be posting my comments that I send to the IRS on this subject in a couple of weeks.  Post yours here as well so we can all read them and get inspired to send ours in.

EIC In Advance is Now History

Or at least will be on December 31st.  I actually never was very fond of having to do this anyway.  It seemed like a lot of work for very little money for my employee.  And honestly, I don't know too many people in payroll that actually have employees using it anymore, at least legitimately. But it seems that a lot of employers and employees like to use it for fraud so they decided to do away with it.  What ever the reason this is one duty I am glad payroll is not going to have to do anymore as of Jan 1. 

I put the full story on my Facebook discussion page so you can read about it there.

Got to fly today, put in the paypal buttons on the website today so it should be up and running by week's end.

Draft Forms on Tap

I get alot of questions about where I find material.  I usually say when you spend as many hours out on the internet as I do you just run into things.  But one site I have made a career in the last 15 years or so of studying is http://www.irs.gov/.  I used this back when it was a bulletin board and we were requesting pubs in DOS.  So I have over the years covered my fair share of the site, especially the parts that relate to payroll.  But branching out is always a good thing and so I have done with the IRS site.  Which brings me back around to answering questions. I am constantly asked how I know what a new form is going to look like when it has not been released for the general use by the IRS.  I answer simply, I look at the draft the IRS puts out for opinions as they are required to do by statutes.

And since draft forms are an area where payroll professionals like to keep ahead of the game knowing what a new form will look like prior to it landing on your desk to complete is the best of policies.  And this is where the draft forms section comes in handy. 

The IRS puts all forms that it is going to release out on this section and lets everyone and anyone look at them.  Right now if you went out there you could see the 2011 Form W-4, the latest version in 2010 of the Form 941X and so on.   And with as much changes as forms are getting lately advance copies are nice.

Once the form gets to the draft stage it is usually set in stone for major changes.  You can access this area by going to the IRS website...www.irs.gov and clicking on Tax Professionals on the top tool line. Then go down the left side under Tax Professional Topics and see "More Topics" as it is on the second page of topics.  Click on this. Then scroll down the topics listed in the center of the page until you get to Draft Tax Forms Picklist.  That is where all the forms are. You can review by  revision date or by posted date.

Checking out this area of the IRS website is a good practice to get into especially as year end approaches.

 

Working on the Blog and Website

I am working on the design of the blog today to bring it more in line with our new website as to logo etc.  No real news today in the payroll world.  So a good day to work on the designs.

Thanks for stopping by.  I should be posting again tomorrow.

Website is THISSSSS Close!

My fellow payroll professionals:  Sorry I missed the blog yesterday.  Was under the weather.  But back at it today.  Just want to give an update on my website.  It is now up so you can view it.  We are doing the final finishes on it and I should be able to announce it this week. 

I will be posting news stories daily or as they come in. I will also be offering an update service so you get the payroll news right to your e-mail inbox.  So check us out and sign up when you see the announcement right here on our blog. 

You can also follow us on facebook by searching for payroll advisor.  We are on twitter as payadvisor.  I am also now on LinkedIn. 

Our website is at www.thepayrolladvisor.com

Yours in payroll...

The Politics of Independent Contractors

As you know I live in Nevada.  There is an article in the Las Vegas Sun today about independent contractors and political campaigns.  In part it reads: Senate Majority Leader Harry Reid’s campaign has accused his Republican rival, Sharron Angle, of attempting to skirt tax law by paying her staff as independent contractors instead of employees subject to payroll taxes. Since she filed to run, Angle has paid her staff as consultants and as such has made no payments to the Internal Revenue Service. Although not uncommon for political candidates, the practice could raise legal issues with the IRS if she doesn’t carefully follow the rules dictating when a worker can be classified as an independent contractor.

What I found most fascinating were the comments made about the story.  For example one commenter wrote:

So, what's the point?? My wife has worked as an independent contractor for years. It's not illegal. By putting this article in the paper, Harry Reid shows his ignorance of how many small businesses and individual workers handle their taxes.

As a matter of fact, it's a common practice and more convenient for some people to either hire independent contractors or to work as independent contractors.There's absolutely nothing wrong here. This is a non-story.

But whether someone is an independent contractor or an employee is not a matter of "convenience" or "common practice" it is suppose to be a matter of IRS regulations.  Right now the GAO is guesstimating that over 30 million workers are misclassified.  States are passing legislation right and left to make it more "costly" to misclassify workers and millions of dollars are lost in revenue for SUI etc due to this type of misclassification.

My question here is three-fold.  First, If our political candidates don't think enough of our tax laws to follow them when they are not holding an elected office can they still create, and vote on legislation that will help keep the country moving in the right direction which ever direction that may be?

Second, why is it that no one seems to understand the basic rules of independent contractors?

And third, should people who deliberately break tax laws for their own financial gain (remember she doesn't have to pay FICA or SUI or FUTA so the campaign saves thousands of dollars which can be spent on ads and such) be given a chance to run our country?  I include all those who hold appointed offices as well.  Like paying for Nanny taxes or back income taxes.

Let us know what you think.

Minnesota Providing Guidance on 2010 Withholding Requirements

Not many states have had time to react to the Affordable Care Act.  So they are beginning to advise payroll professionals on how to handle reporting and taxation for 2010.  Minnesota is the latest to give us some guidance.

The 2010 Minnesota State Legislature did not enact legislation incorporating into state law any of the changes to the IRC contained in the Affordable Care Act.  So for the definition of wages payroll departments will have to include the fair market value of insurance benefits provided to nondependent adult children as taxable wages for 2010.

It appears that this will be a growing trend for the rest of the states with income taxes.  And I think it will also be a trend for the SUI taxable wages as well. 

It would be a great idea if payroll departments get out in front of this by informing employees of the tax consequences of this now before the employee gets hit with a big state income tax bill next year.  Employees may want to adjust state withholding to compensate while they still have some time left.

How are you handling the state taxation of adult children insurance coverage in your department?  Let us hear from you.

Military Spouses in Ohio Just the Latest

Since the 2009 change in tax law under the Military Spouses Residency Relief Act that permits military spouses to be able to determine their residence for taxation while on assignment with the military spouse more and more states have weighed in.  The latest is Ohio.

This act basically states that a civilian spouse of an active duty military service member is not subject to income tax of the state in which the spouse is present if the service member and the spouse have the same state of residency and that state is in another state other than the one in which the service member is stationed.

Ohio's Department of Taxation is now making the IT-MIL-SP form available for spouses of active duty military.  This form allows the spouse to exempt themselves from Ohio taxation for wages earned in Ohio if that is the duty station of the military spouse but not the actual resident state of the spouse.

Payroll professionals need to research this area carefully as many of the states are now using this type of form to allow the spouses to opt out of taxation on their payroll check.

Will Be Back on Monday

Sorry it's been a while since I have done my blog.  I am still working on my website.  The tech side is very complicated but will be well worth the wait. 

Unfortunately I had a personal tragedy as my old dog, Lady had to be put to sleep this week.  So I am taking a little time to grieve.  I thank you for your patience.  I will be back on Monday come hell or high water, website up or not!

Have a great weekend.

I Am TWEETING or is that TWITING???

Eventually we all have to catch up with technology.  Now I love my tech toys such as my old HTC phone or my new i-phone.  I used VCRs the day they came out with my bootleg copy of Star Wars (Chapter 4)--hey okay so I am old!  I was on the "internet" when it was still bulletin boards with modems.  So I have no fear of technology.  But for some reason I just never got around to Facebook and Twitter--until today!

As of today I am tweeting (I still think it is twiting if properly done).  My name is Payadvisor.  Someone in OC had payrolladvisor so I had to abbreviate.  That's what you get for coming late to the game.  I am using Twitter to send out bulletins to my followers to keep everybody up to date. 

I also set up Payroll Advisor on Facebook.  I tied the two together so when I post an update on Facebook it will send out the Tweet.  Today we covered New Mexico changing EFT requirements for withholding deposits.

I want to get discussions going on my Facebook page as well.  So when my new website is up and I am able to post news daily there, I will start posting discussions of payroll issues that I find elsewhere but thought were interesting.  Until my new site is up I will be posting news on my Facebook page under discussions or notes.

Hope you can come by for a visit and "be my friend".

Website Update

Well here it is mid-July and I am working diligently on my new website.  It has been interesting to say the least.  I may be an expert on payroll matters but this programming website stuff is making my eyes spin.  But my programmer is doing a great job.  Just remember we will have a free payroll news bulletin for you to sign up for to keep up on the latest from the federal and all 50 states. 

So to keep the website on track I will not be blogging full time again this week. But should be back to my regular Monday-Thursday schedule next week.

So remember they may only be 214,000 payroll clerks in the U.S. but every last employee gets a paycheck!

Should the United States Celebrate the 4th of July?

The title sounds like I am advocating not celebrating our independence and that is not the case.  What I am saying is that if we do celebrate the founding of our country why is it not a national holiday under wage and hour law?  In other words, if the day is so important that we have parades and concerts on the National Mall, then why don't workers get the day off with pay to celebrate?

The United States is basically the only industrialized nation that does not have mandated holidays.  I can understand not having a nationalized holiday based on one religion, for example Christmas.  Or a holiday that celebrates the changing of a calendar--New Year's Day.  But days in which we celebrate our national heritage and history workers should be able to do so without loss of pay.

Just a thought, what do you think?

Website update:  we are in the final stages for our new website.  But still working on content. So my blogs will be intermittent at best.  With over 900 pages of my Complete Guide to Federal and State Payroll Compliance to load it is taking time.  In addition, we will have lectures, powerpoint presentations and white papers.  But when it is complete it will be one of the most comprehensive sources for payroll information and research.

New Website for Us

Thank you for visiting my blog.  I have exciting news today.  We are working this week on the final touches for my new website.  So I invite you to peruse my previous blogs for a couple of days while we work on getting the information loaded on the website.

The new site will have my entire 900 page manual "The Complete Guide to Federal and State Payoll Compliance" on it. To make it easier to use online,  it will be broken out by topic.  So if we were speaking of wage and hour law today, you could go to "O" for overtime and find the information you need on calculating regular rate of pay.

In addition to the wage and hour or tax law information contained in my manual, the site will have daily news updates right on the home page.  And it will have a power point reader version of all my presentations on such topics as wage and hour law, fringe benefits, multistate taxation, and child support.

So enjoy our previous blogs, which have some great information for you and I will see you next week..

Are Garnishment Limits on the Rise?

As I was reading my daily news updates and preparing them for distribution to my newsletter subscribers I found a very interesting item on an area that doesn’t get changed very often. Florida is amending its wage garnishment provisions to increase the amount of wages exempt from creditor garnishments. This applies to the head of household or head of family category. They are increasing it from $500 to $750 a week. Anything under that limit cannot be attached or garnished. It allows for the garnishment to take place if the person agreed to it in writing. But it provides the form to be used for the agreement to waive the exempt to garnishment. It is very rare that these types of amounts are changed. It usually only happens when the minimum wage is increased or they haven’t been changed for many years.


Another reason I find this interesting is the wave of questions I have been getting lately concerning payday loans or personal loans at payday stores. When a person gets such a loan, it appears, they sign a letter that states they agree to allow the amount to be deducted from their wages if they don’t repay the loan. So payroll professionals are unsure sometimes whether to honor the agreement. Most that I know do not as they are a voluntary wage assignment and employers are not legally bound to honor them in most cases. But I was wondering if this increase in the amount subject to garnishment in Florida and the fact that they now have a special form to use and the growth of payday loans is somehow related.

So will we be seeing a rise in garnishment limits in the future in large numbers or is this a one-off case for just Florida? We will have to wait and see.

In the meantime, have you been getting any requests from payday loan type establishments wanting you to honor withholding agreements? Let us know how you handled it.

Have You Heard the Latest?

This is the information age for sure. We are all constantly bombarded with news and updates—practically 24/7. But is it useful information, that is the question. Nine times out of ten it is not. But current information is vital to today’s payroll professional. Changes occur daily, weekly, and monthly nowadays rather than just annually in January as in days gone by. With the Form 941 changing in April two years in a row, COBRA subsidy extensions coming in ad nauseum , and states changing or updating laws all year long it is surely a best practice to make sure you are getting the current information—shall I dare say “currently”.


But what is current in this electronic age? Even 5 years ago getting a monthly or a biweekly newsletter was sufficient to keep the payroll professional informed. But today it is just too slow. Newsletters may come electronically but they are still composed the old fashion way. They need to be written, then edited, desktopped, then finally distributed. So by the time the newsletter lets you know that the Form 941 has been updated for the second quarter and how to handle it is coming soon, the IRS, who is working in real time, has not only posted the form, but the instructions, the FAQs, and the corrections to their website.

Don’t get me wrong, newsletters are still very valuable. They are able to give you the full story, the details that a news bulletin cannot. But that is for later, when you are studying the information, not when you need to know about it now. So how does one obtain this up-to-the-minute news? Actually by spending a little time, you can acquire it very easily.

All of the federal agencies and most of the state agencies as well, now offer free e-mail news updates along with their monthly newsletters. By taking the time to go to each website and sign up you can have this information right at your fingertips at the same time as the large payroll news services and for free to boot.

It will cost you some time to sign up, after all nothing comes without some cost. Most states have a minimum of two sites that you will need to sign up for--one for taxes and one for wage and hour law. In addition other states divide up the responsibilities for the taxes. One agency may handle income taxes while another handles unemployment insurance. But it is well worth the time you spend on this.

If you have a staff you may want them to read the updates as well. You can distribute them via e-mail of course. Some departments are actually setting up a special e-mail address for these types of updates. That keeps the updates from being caught in spaminators or getting lost in the clutter of your e-mail first thing in the morning.

Now for a commercial break! Hey it’s my blog. Those of you have been reading this blog over the last couple of months know that I don’t usually do commercials for my company. But it just so happens that I am starting a news service for payroll professionals. As I have signed up for these services that I advocate here plus I pay for several other services I am certainly on top of the breaking news. Right now I am posting a small portion of these news items on my website. However, I am setting up a brand new website starting July 1st. At that time I am offering a subscription service to the Payroll Advisor’s E-News. For a small fee you can receive the latest news from the IRS, DOL, SSA and all 50 states for wage and hour as well as SIT and SUI changes right to your designated mailbox. I have been asked to do this for years and now I finally have the means and method to do so. So visit my new website after July 1st and sign up for a 30-day free trial subscription.

If you sign up for the e-mails directly you should be aware that there will be chaff with the good stuff. Depending on how the state sets it up you may get sales tax info along with withholding. With the IRS you will get a lot of CPA type updates along with the payroll news. But again well worth the quick scan to see what you need to read further.

So whether you sign up directly or use a payroll news service keeping up-to-date on payroll news and information is definitely a best practice.

So how do you keep up to date?  Let us know.

It Bears Repeating--Let's Have A Lunch Break

Today I want to repeat a blog I did on May 3, 2010.  It is about something that has bothered me for a long time. And that is the fact that the United States has no federal law that requires employees to receive a meal period. There are states that do require a meal period. Check the link http://www.dol.gov/whd/state/meal.htm for a list from the DOL’s state laws page. Less than half or 20 out of 50 states plus DC require a meal period. That means that while employees in California, Nevada, Massachusetts or Rhode Island for example are entitled to take time to eat, employees in Mississippi, Florida or Georgia must rely on the kindness or good will of their employer to eat a meal.

That is why my question today is simple: Why is there no law under the federal rules to require an employee to receive a lunch break? It’s not necessary is one argument I hear constantly. No employees would work for a company that didn’t give them a lunch. I actually had that discussion during lunch at the International Association for Human Resource Information Management Exposition. The HR professionals all agreed to that premise. Maybe in good times when jobs are plentiful, but what about these economic times? Or in low pay jobs?

Another argument against regulating lunch is that it is such a common practice in most cases so there’s no reason to have to legislate it. But is it common practice or common myth? If you follow the DOL on their audit information they release or court cases you know that failure to pay employees when they have worked through a lunch is actually quite common. In other words employers illegally dock employees for lunch when they haven’t taken it so what makes anyone think that they are offering lunches to everyone when not required to.

I am not asking for a paid lunch. But simply require that all employees within the United States regardless of the area of the country they live in deserve and are entitled to 30 minutes to eat lunch during the course of the work day. This wouldn’t be that hard. Other industrial nations offer it. 20 states offer it. And unlike the minimum wage that is actually based on the economics of the area where the employee works eating lunch is not. I totally agree that the cost of living in Kansas may be lower than in California so each state should be free to set a higher or lower minimum wage than the other. But the need to take time to eat food during the course of an eight hour day is not decided by geographical location.

Maybe payroll professionals should rise up and start the “Let’s Have Lunch” movement to make the law universal to all employees in all states. It certainly would make our job easier if the laws were more streamline. That’s my thought for today on wage and hour law…what do you think?

What Changing Already?

When you start a blog like this one its always difficult to know how to organize it and what to write about. So you start out organizing it one way but soon discover it doesn't quite work for you, so you make some changes.  And that, ladies and gentlemen, is what has happened to me.

When I first started I thought it would be best to have a specific topic on payroll for each day of the week.  This way all topics are covered and I would always know what to write about on that day instead of sitting around going what should I write about today? But now that I have a few months under my belt I find this method doesn't work very well for me.  I feel like I am missing out on pressing or current topics. For example, Monday is wage and hour law.  But the DOL  or a state announces a change on Tuesday.  To keep to the topic schedule I wait until the following Monday to write on the news.  And that I just don't like.  I want this blog to be current, in real time so to speak.  If the DOL announces it today, I want to write on it either today or tomorrow, not a week from now.

So as of today I will be making some changes.  I will use the news of the day for my topic first instead of the daily subject.  And if there is no relevant news of the day, then I will use the topic when needed.  And you can rest assured that anytime I feel the need to blog on the payroll profession I will do so regardless of which day of the week it is.

In addition, this will be my last Friday blog.  I will only be blogging Monday through Thursday.  Now before you start accusing me of taking time off and what kind of payroll professional can I be if I can take time off, I actually need to use Fridays for my business.  You see every other Friday I use as my catch up day.  I update my school websites and manuals, write newsletters, answer questions from seminar attendees, do phone conferences with clients etc.  Trying to blog on that day is really tough.  And on the opposite Fridays I handled all of my business out of the office such as appointments with clients etc.  So that means this is my last one for Fridays.

But maybe it won't be the last blog we post on Fridays.  What I hope will happen is all the payroll professionals out there who want to do a blog one time or every once in a while, might submit their blog to me and I can use Fridays for posting their blogs.  So Friday is guest blog day.  If you want to get something off your chest and it is payroll related send it to me at payrolladvisor@cox.net.  I will be posting your blogs on Friday.

I hope you like the changes.  Please let me know what you think.

The Answer We Waited a Week For

Last Thursday I blogged about using the Employer Social Security Credit under the Hire Act. You can re-read the blog for the full scope of the discussion.  But one point that I made was that while researching questions on using the credit I wondered how the IRS would answer if the question of whether or not an employer can use the credit at the end of the quarter or do they have to do deposit by depost was put to them.

So as I said in the blog I e-mailed the IRS and asked the following question:

I have a webinar atendee who is using the Employer Social Security Tax Credit under the Hire Act for the first time in the second quarter.  The question is can an employer take the credit on the Form 941 only and forgo using the credit for each deposit made or must the credit be used as each tax deposit is made for the appropriate payrolls? 

I got the answer back on the following Tuesday so as promised here is the IRS's response to the question:

Since the credit allowed under the HIRE act reduces the total tax liability on the Form 941, the deposits may be reduced accordingly but it is not a requirements that those deposits be adjusted.  If the tax deposits are not reduced, the result will be an overpayment of the tax and a refund may be claimed when the Form 941 is filed.

Well I feel really great about this.  My answer to my seminar attendee was spot on! But it never hurts to confirm it with the IRS.

How are you using the credit?  Let us know

Electronic Signals or Piles of Paper--You Decide

At this year's APA  Congress a panel was held on Electronic Income Withholding Orders for Child Support (e-IWO).  According to Bill Stuart, a software developer who works with the federal Office of Child Support Enforcement, the Electronic Income Withholding Order, designed for large employers, has become so prevalent that some states are considering the mandatory use of the program.

The e-IWO portal, which facilitates the transmission of the withholding orders to employers, is used in 22 states.  New Jersey began using the portal on May 26th.  The e-IWO program allows employers to make entries on a spreadsheet or PDF.  The program is user-friendly, accurate and provides secure delivery to employers.  The portal is a central location for child support orders and is helpful for employers dealing with multiple employment sites.  The portal also quickly gets payments to state disbursement units (SDU) and recipients.  The panel also discussed converting to not just receiving support orders electronically, but also sending payments to the SDUs using electronic funds transfers.  With the exception of South Carolina, SDUs receive and send payments electronically, said Nancy Benner, employer services specialist for the Office of Child Support Enforcement.

Boy, have things changed since I began my payroll career back in the mid-70's. Back then and through the decades since we basically had paper everywhere when it came to child support.  As laws were passed that increased our responsibility in collecting child support, the paper piles increased as well.

So our best practice suggestion for today is to take advantage of modern technology when you can and sign up for electronic Income Withholding Orders.  In addition, set up a program to submit your child support payments via EFT through the SDUs.

Let us know what you are doing in your payroll department.  Are you signed up for the e-IWO?  What has been your experience using the system--good or bad?  Do you have questions about using SDUs?  Post them here and we will get the answer for you. 

HHS Wants Us Fit—IRS Wants the Tax

It’s been in the news a lot lately—how unfit Americans have become. The First Lady is advocating programs to fight childhood obesity while AARP is starting an online movement to get fit over the summer. Everyone is being asked to join in and help. But for employers helping fight obesity is a two-edged sword.


If the employer takes office space and puts in a gym on site for employees to use, it is tax free and employee good will is created in addition to the benefit of giving employees a chance to work out. But for the employer to use valuable and sometimes nonexistent “extra” office space to put in a gym can cause a lot of “bad will” among workers who are crammed into cubicles. And let’s face it not too many companies have an extra 500 square feet just laying empty. Plus I really have to ask how many of us overweight and out of shape payroll professionals want to huff, puff, and sweat in front of our staff and fellow co-workers. I know I never did. Plus with no shower that’s not too pleasant back in the small and cramped payroll office. And if the employer does put in a shower, I really don’t want to strip and shower in front of my staff!

But the employer really wants to offer a healthier lifestyle to its employees. And many local businesses want to help other local businesses by buying services. So they buy a gym membership for all their employees. It might be a one-off benefit or even part of a larger and more complex wellness program that includes quitting smoking and diet tips. Either way it doesn’t matter. If the employer buys the gym membership everyone is paying taxes on it. FIT, FICA, FUTA, SIT, SDI (where required), SUI, Local Taxes. All of them. In essence the employer is made to pay more simply because they don’t want a gym next to their conference room.

My point is if the government wants Americans to get fit why make it harder and more expensive to buy a gym membership rather than gym equipment. Why should employers have to pay more for offering basically the same thing.

That’s my thought, what do you think?

Does your company have a gym? Do they buy memberships? Let us know what you do and how you handle it.

Multiple Rates of Pay—Finally a Use for High School Math

Under the FLSA it is required that employers pay employees overtime based upon the regular rate of pay. Over the course of the next few months we will often discuss this topic. But today I want to look at one facet of calculating overtime and the regular rate of pay. What to do when an employee works at two or more different rates within the same workweek. In this type of situation, the regular rate of pay for the week is the weighted average of all the rates. Remember weighted average is not the same as average.

Let’s do an example: At Secrest Corp this week Paul worked to cover for other employees on vacation. His time card reads as follows:

Day                     Per Hour Rate               Number of Hours Worked
Monday                    $8.00                                 8
Tuesday                    $8.00                                 8
Wednesday               $9.00                                 8
Thursday                   $8.75                                 9
Friday                       $7.50                                10
Total Hours                                                        43

Paul does not work in a state which requires daily overtime. So under the FLSA we would calculate his gross pay as follows:

Step 1… Calculate the Earnings for Each Day
Monday                            8 x $8.00 = $64.00
Tuesday                            8 x $8.00 = $64.00
Wednesday                       8 x $9.00 = $72.00
Thursday                           9 x $8.75 = $78.75
Friday                             10 x $7.50 = $75.00
Total                                                    $353.75

Many times I have seen payroll professionals confuse weighted average with average. They add up the rates then divide by the number of rates. For example $41.25 (total of all the rates) divided by 5 (number of rates) = $8.25 and try to use that as the regular rate of pay. In this case it would be close enough. But unfortunately it doesn’t always work out so close and can end up underpaying the employee.

Step 2: Divide the total earnings by the total hours worked to determine the regular rate of pay
$353.75 divided by 43 = $8.23 (regular rate of pay)

Step 3: Determine the premium pay for overtime by multiplying the regular rate of pay by .5 (or divide by 2) then multiplying that amount by the number of overtime hours
$8.23 x .5 x 3 = $12.35

Step 4: Determine the total weekly compensation by adding the total earnings (step 1) and the premium pay (step 3)
$353.75 + $12.35 = $366.10 (total weekly compensation)

These 1938 rules under the FLSA require this method to properly pay employees working at more than one rate in a workweek. So you see, you should have paid closer attention to your teacher in high school math class.

Do you have to do weighted averages where you work? How do you handle it?

Let us know. Join in the discuss.

Where is my PH.D in Payroll?

A good friend of mine that I have known for over 30 years joined the thousands of grads this year by getting her Master’s Degree. She had a BA but decided to get her Master’s. This happy event got me to thinking maybe I should go back and get my Master’s or even a Ph.D. I have always wanted to be known as Doctor Vicki. But then the same old roadblock comes up. What would I get the degree in? When I first started out in payroll in 1977 or so I was still attending college as an undergrad. When I realized what I wanted to do with my life (I live for payroll, of course!) I encountered the fact that there were no under graduate or graduate degrees in either personnel or payroll at that time just accounting.

Well 10 years later I was able to finally get my undergraduate degree but it was in Business Administration with an emphasis in Personnel Management. And I had to go to National University to get it. I was living in San Diego at the time and San Diego State didn’t offer it. But neither school had anything that related to payroll. Now, of course, 25 years later I can go back and get a Master’s degree in Human Resources Management from Penn State or even Rutgers or San Diego State if I wanted to. I can even get a Ph.D in Human Resources from Temple University or UCLA. But where the f%$@ is my Ph.D in payroll!

Google it sometime and you will see. You can take payroll accounting courses, human resources courses, labor law courses but nothing that prepares you for payroll itself. Yet, as a payroll professional I am required to know all of the wage and hour laws not only on the federal level, but for every state in which I have one employee located. How many attorneys can say they know wage and hour law in 47 states well enough to actually pay an employee? I’ll be the answer is zippo! But there are thousands of payroll professionals who must know this information on a daily basis and do.

Payroll professionals must know all the Internal Revenue Codes that relate to paying employees including taxation of fringe benefits, withholding tax and deposit/reporting requirements. If they make a mistake—fines and penalties. Not only do they need to know it for the IRC but for every state they are located in. And not just income tax, but FUTA, and the state’s SUI plus local taxes. How many CPAs can claim they can rattle of the taxation requirements for SUI for 50 different states and the District of Columbia and are able to do the 941 in Spanish for Puerto Rico?

So where do we have to learn this? Where do the 214,000 payroll professionals working in the United States (as of 2004) learn it all? By hook or by crook. By reading IRS publications, begging for funds to take a training course or two, taking my on-line courses, attending free seminars given by the IRS or State agencies or by learning from each other.

This is no way for the number one collector of taxes and child support in the nation to be trained. Why can’t I as a payroll professional attend college, learn all about everything I need to know, take that into the real world, find out it is useless and then learn it all on the job just like all other professions such as lawyers, human resource professionals and accountants! Where is my Ph.d in Payroll!

What about you? What did you end of getting your degree in or have you not bothered since it doesn’t matter in payroll? Let’s hear from you.

Employer Social Security Credit—Whose Using and How

In May I conducted a webinar on the Form 941. As is customary attendees can submit questions in advance. One question that I received was very intriguing. The attendee wanted to know if anyone was actually claiming the Employer Social Security Credit permitted under the Hire Act. And if they were using it, how were they taking it. Was it per deposit? Or were they just going to wait and claim the entire quarterly credit on the Form 941? The attendee went on to ask if taking the credit at the end of the quarter was even permitted by the IRS.

See what I mean about intriguing. Of course the first step I took was to review the new instructions for the 941 concerning the credit. Nothing there prohibited the employer from taking it all at once but nothing said okay either. I read the FAQs and again the same thing. So the opinion I gave the attendee was simply that I didn’t see anything that prohibited the employer from taking the credit as a lump sum on the 941 instead of using it deposit by deposit.

But then the more I thought about it the more I wondered if the IRS would actually make the same interpretation if the question were put to them directly. So this morning I sent an e-mail over to the IRS and asked them about taking the credit as a lump sum on the 941. I will share their answer with you in next Thursday’s blog on reporting. I should have it back by then.

The second part of the attendees question asked how other payroll departments were handling the credit in the real world. I made a few phone calls to some payroll friends to take a quick unscientific survey. Amazingly I got the same answer from all of them. If they were using the credit they were waiting until the end of the second quarter and just claiming as a lump sum. It was not worth the time and effort to do it deposit by deposit. What surprised me a little is how many companies are not even using the credit.

So our discussion for today is simple. What are you doing in your payroll department? Are you taking the credit deposit by deposit? Are you going to wait until quarter end and do a lump sum on the 941? Or maybe your company isn’t even taking advantage of the credit. Post a comment and let us know.

Reconciling Form 941 to Forms W-2 is Definitely a Best Practice

Hey everybody I am back! Sorry to disappear so suddenly and for two weeks (in the cyber world a long time!) right after starting the blog. I would love to be able to tell you that I took an impromptu vacation to a beautiful island in the Caribbean but unfortunately that was not the case. I got laid up with a severe bout of pneumonia. Between urgent care trips, hospital stays, and sleeping for 7 days with a temperature of 103 degrees the blog, as important as it is to me, got lost in the chaos. Trust me I wish I could have done the blog instead of watching Real Housewives of New Jersey! Those ladies are CRAZY! So please accept my apology and let’s get back up and running.

We use Wednesdays for our best practices in payroll topic so today I would like to discuss reconciling the Form 941 against the W-2s quarterly. This is the best and most efficient way to ensure that your W-2s balance before final processing during year end. The reason I am picking this topic today is it seems to be on everyone’s mind with the new version of the Form 941 being released recently.

Now a lot of payroll professionals tell me they don’t do this quarterly. After all year end is 2 quarters away why reconcile now. Why not just do it when year-end gets here. But that is just the point. By reconciling each quarter you know as you go along that everything is in balance. Then at year end it’s just a quick reconcile of the 4th quarter and a submission to close out the year. This is much more efficient and definitely a better way than to sit down in January and hope it all balances. Basically it is balance now or balance later. And I hate spending all of January looking for a $4.00 difference!

What about you? What do you think?

Note: For those of you who would like more on reconciling Form 941 to Form W-2 I will be placing a white paper on my new website www.thepayrolladvisor.com by the end of this quarter. It will be available for download.

Payroll Is Human and So We Should Be

First let me apologize for missing the blog yesterday. I was working on a deadline for the Payroll Manager’s Report and just did not have time to get the blog posted. I have to be honest with you that will happen from time to time. Why? Because believe it or not even though I am a payroll professional I am also human. And as a human being I am subject to the same exhaustion after a long day, the same illnesses and the same malaise that affect all of human kind.

Why am I using today’s blog to point out that payroll professionals are human? Because sometimes, let’s face it most times, we don’t think of ourselves that way and others rarely see us that way. I mean how many of you have put your payroll before your health? I know I have on dozens of occasions. I had to have emergency surgery one time. Not life threatening just had to be done that day. But you better be sure that I dropped off the direct deposit (we had to take it to the bank in those days) and made the tax deposit on the way to the hospital. What did my husband say as he was driving me? Absolutely nothing. He had been married to a payroll person for a number of years by that time so knew better than to protest. In fact when I was in the doctor’s office the Doctor asked if I wanted to have the surgery that morning or in the afternoon. I said the afternoon, he argued for the morning until I told him I was the payroll clerk and I had to get the checks out. Then he totally understood and scheduled the surgery for that afternoon. See what I mean about how others see us. Would he have reacted the same way for accounts payable or marketing? I don’t think so.

My point is how many other professions do that when it isn’t a matter of actually life and death. Firefighters have to put the fire out or people will die, property will be destroyed. But payroll, where is the matter of life and death? Yea people want their checks and they do have to pay bills. But does the payroll clerk have to die or endanger their health for it?

I always thought that my devotion to my payroll was just me. And I have to take time out to mention that it is really only payroll people who use the term “my” when referring to their job. Pay attention some time. Most people use “the”. I have to get the checks out. But payroll people use “my”. I have to do my deposits, my garnishments, my checks, process my payroll. And I am no different. It wasn’t until I started attending APA meetings in the middle 80’s that I found out I was not different than other payroll professionals. We all seemed fanatical about getting the payroll out.

So for years I accepted as normal my reaction of utter dismay and shock when HR would take off on vacation during open enrollment. Why that’s like leaving during year end! How could they do that? Their attitude was normal for other employees. It will be covered while I am gone or will wait until I get back. But not in payroll, oh no. I, like so many other payroll professionals I know, check my processing calendar before agreeing to attend parties, schedule surgery or doctor appointments, or any other event in my life. I want to make sure it’s not on a payroll week. Oh I may still do it but I will know to work extra the day before so as to leave nothing undone. And yes, my payroll was finished before I went into labor to have my daughter 28 years ago.

But now I wonder if perhaps this is not such a good thing for payroll people to do. Do we sacrifice our efficiency if we work when ill? Do we sacrifice our careers because we don’t want anyone else doing our payroll? I am going to be returning to this topic for the next several weeks. I think it is important to discuss this as it is the very core of the profession.

So let me know what you think? Have you ever put payroll first? I bet you have.

Cranky About Benchmarking

I think Wednesdays are going to be interesting days for the blog. Best practices is an area where we can agree to disagree and maybe even be a little “cranky” sometimes. I think this is one of those “cranky” days. I am in the process of conducting a survey of 200 or so payroll professionals on benchmarking. Benchmarking is a best practice by all means and one that is very much in vogue right now. I am doing the survey for an annual benchmarking report for which I am the editor. But why am I cranky about this best practice? I am cranky because I am actually getting e-mails saying that the survey is much too long, or too much work, or a lot of trouble. You see I think some people in payroll are not getting the concept of benchmarking and best practices. It appears they think that all you have to do to benchmark your payroll department is answer a few quick questions and abra cadabera you are benchmarked!

But the survey is asking for the cost of manual checks, how long between getting new hire or termination paperwork and the payment, or how many errors occur on average in the payroll department. These are the processes that have to be benchmarked so you can determine best practices and make improvements. You have to know what goes on with every process or procedure in your department to know what needs to be improved. And it takes a lot of work to get to the point where you can say “it costs this much money to cut a manual check” or “we have three errors on average per payroll of 10k checks”. In other words it takes months of work just to determine where you stand so you can improve from there.

I guess my worry or the cause of my crankiness or angst is that there are some in payroll who still feel that just pushing paper around to pay people is good enough to run the department. That having to know the inner workings, the actual numbers, the essence of the department is too much work. And it shouldn’t be.

What do you think? Are you benchmarking?

Mileage is Mileage and Needs to Be Tracked No Matter What You Call It

Whenever I am holding an audio seminar or webinar on fringe benefits one question I can always count on deals with auto allowances. It seems that a lot of people think that because they are giving the employee the money to cover the business use of a personal vehicle that it is all nontaxable to the employee no matter how much they give them. Unfortunately, that ain’t so.

Every year the IRS sets the mileage rate. This year it is 50¢ per mile. That means that as an employer you can reimburse an employee up to that amount for every mile they drive their own car on company business. But the IRS isn’t going to take your word for it on the mileage. There must be records and logs to show the nature of the trip, the amount of miles driven etc before reimbursement can be done. Then it is number of miles driven times the current rate for mileage. Anything else is taxable income. And that’s where the disconnect seems to be with auto allowances.

Employers tend to give flat amounts to employees such as sales staff for the business use of their personal car and then drop the ball thinking that as long as it’s for mileage that should be it. But what actually has to happen is that the employee must put down all miles driven and the nature of the trip in a log. Then the total miles has to be multiplied by 50¢ for this year. That is what you can reimburse the employee. If you give a flat amount each month, you have to compare the amount you gave against the actual mileage log calculation for the same month. If it is less than the amount you gave the employee, then the employee has to give that overage back or be taxed on it.

And no it doesn’t even out over time. Once you calculate the miles in the log it goes against the month the monies were paid. For example I gave a member of the sales staff $500 for the month of June as an auto allowance. He drove, according to the log he gave me, 952 miles for business reasons. Do the math: 952 miles x $.50 = $476.00. He had to give back $24 or I have to run it through payroll. It is that simple.

Now trying to get sales people to keep the logs accurately, and turn them in on time, now there’s something that ain’t so simple!

How do you do it on your payroll?

As Long as the Check Doesn’t Bounce…

As I was going through the news updates for my website today (thepayrolladvisor.com) I came across a news item that struck a nerve for today’s blog. The item? Tennessee is now allowing employers to pay their employees via payroll card with the usual restrictions. These restrictions include no fees for one time withdrawal of all monies, etc. This news items simply adds the state to the long growing list of states that permit payroll cards as a method of payment. So what was it that caught my eye? Well, why do the states have to address this issue at all? I just have to question why each state has to address an issue that is obviously universal to all workers within this country. So therefore it should be a national law not a state by state one. All employees have to be paid, whether in Tennessee or New York. All workers have access to banks whether in Tennessee or New York. We don’t do local checking in this country anymore. We use our debit cards or credit cards or even cash as well as checking accounts. So what is wrong with having there be one law in this country on the federal level to state how employees need to be paid?

We can start off with the universal standard of “employees must be paid in cash, or by negotiable instrument payable upon demand without discount.” Then just state that payroll cards or direct deposit are included as negotiable instruments. We can add that there can be no fees if the employee is paid electronically. They have one withdrawal of all monies at no cost. No one can force an employee to have a bank account if they don’t want to or are no longer eligible. And the check has to be good. Why 50 different laws in 50 different states to have to research and worry about when one would be more efficient and more universal. And it will protect the worker in those states that don’t address the issue at all or haven’t gotten around to noticing that we are now in the 21st century when it comes to wage and hour laws and paying employees.

What do you think?

Why Doesn’t the IRS Think Payroll Needs Affordable Tax Workshops?

Every year the IRS offers a series of Tax Forums across the country, usually in seven or eight cities from east to west coast.  Of course they come here to Las Vegas.  The Forums offer all kinds of workshops on all kinds of tax issues. It is geared primarily to CPAs and Enrolled Agents.   But the cost is only $165 so even if there are only two or three workshops for payroll it is still a great deal.  This is especially true if you are a CPP like me who needs to have these types of classes to renew. After all the APA charges $1300 to attend their Congress each year and they offer tax compliance workshops.  Why not get the info from basically the same speakers at a price one (or the company I work for) can afford to pay?

For the past several years I have attended the Tax Forum here in Vegas with my CPA friend.  I even wrote about them in the Payroll Manager’s Report touting how great they were for payroll professionals.  Workshops I have attended included taxing nonresident aliens and filing W-2s electronically.  Well after the first Forum I attended they asked for a survey of attendees as to what workshops they would like to see in the future.  I, of course, jotted down some quick suggestions on adding Form 941, third party sick pay, and taxing fringe benefits in general.  I submitted the survey and went merrily on my way, knowing I would see at least one or two of these courses next time around.

The next year came around but they did not have any new workshops for payroll people.  In fact they had dropped a few from the time before.  But still they had enough to get my money’s worth so I attended.  And again they asked for ideas for workshops.  Well this time I got a large cup of Starbuck’s coffee, a muffin and a pen and off I went.  War and Peace it wasn’t but it was nearly that large.  I explained how they could attract payroll professionals thereby increasing attendance, and ensure better compliance by offering these workshops.  And it’s not like CPAs don’t need the information, they do.  I submitted my tome of a survey and headed off into the future secure in the knowledge that I would see these workshops this year. I mean the IRS would surely jump at the chance to educate those professionals who are responsible for collecting at least half of the taxes in this country.  Isn’t compliance in payroll one of the most important things to them?  They have all these publications to tell us how to handle fringe benefits surely a workshop or two wouldn’t be out of line?

So as soon as I got the e-mail for the Tax Forum this year I opened it with great anticipation.  Wondering how I was going to fit in all the payroll related workshops this year.  You know where this is going of course.  Not only did they ignore my suggestions for workshops related to payroll but actually dropped any workshops that would even matter to payroll professionals.  They only ones they kept were the tired old ones they always offer.  Those are the ones on how to submit W-2s electronically and matching names and numbers on the W-2 to the SSA’s data base.  Those both are actually offered by the Social Security Administration so I can’t fault them for not adding any new ones.

So the question arises, why doesn’t the IRS want to offer affordable tax compliance workshops to payroll professionals at their Tax Forums?  Are they worried that so many payroll professionals will show up there will not be enough room for the CPAs?  I don’t think so! Do they not care about compliance when it comes to payroll?  I doubt that.  The only reason I can think of is maybe they don’t want to tick off the APA by offering us affordable training.

What do you think?

PS:  No I am not attending the Forum this year! Why waste the money.

Why Not Use One Form When We Can?

I just finished writing my monthly article for the Payroll Practitioner’s Monthly for IOMA. This month my article is on abandoned wages. So as you might have guessed I am still knee deep in reporting requirements and forms for all the states. So that brings up my reporting topic for this week. Why can’t we have one common form to use when one common form will work? I mean how many different ways do we have to know in order to report an employee’s name, address, check date and amount? 50 different states, so we have 50 different forms. Can’t the form for California be identical to the form in Alabama? Yes they are similar. But each one is just different enough to cause you to have to learn the form. The requirements are all pretty similar. Most are after one year, most due in November for wages owed as of June 30. There are a few notable exceptions such as New York on the reporting dates or Delaware on the time limit. But the information being asked for is still the same in most cases.


Now I understand that we must report the wages to the state where the employee last resided. The 1965 U.S. Supreme Court case gave us that requirement. So no, we can’t report all abandoned wages to one state like we do new hires. But nothing says the reports can’t all be the same. After all, they have managed to pretty much standardize new hire reporting forms again with a few notable exceptions. Why not abandoned wages forms?

So what do you think? If they can standardize a complicated form such as the Child Support Withholding Order then why not the abandon wages reporting forms? It sure would make it much simpler come this November.

According to Our Payroll Calendar That is Due on…

One of the best practices that a payroll professional can implement is publishing an annual department calendar. It doesn’t matter if you are the manager of a 15 member payroll department of a multinational corporation or the sole payroll clerk in a small company. By publishing a calendar of dues dates for payroll you go along way towards increasing communications with other departments and individual employees.


I am not talking about your processing calendar that you set up every year with your outside payroll service vendor or the IT department if you are in-house. But rather a calendar that explains every deadline you have to anybody who reads it and needs to know a deadline. You could lists period end dates, processing dates, dates for submissions of such items as new hires, FormsW-4 updates, address changes, direct deposit set ups or changes to existing accounts or even pay raises. For example you could list the entry on the calendar as: Friday, May 14th: Last day to submit changes or updates for the May 21st Payroll. Please have into payroll by noon Pacific time.

Of course you would also list when you need things from other departments if you would like or send a separate calendar for them alone. Whatever works best for your company’s way of communicating. The calendar is distributed to all departments. You can even distribute it to all employees if you can use e-mail. Paper would be way too much time and effort. Post it where you post other payroll items such as payday notices or wage orders. Publish in the company newsletter on a monthly basis for the upcoming month. Reminder e-mails for the month ahead can help in gently keeping everyone on schedule. And don’t forget to put it on your webpage if you have one set up.

This best practice goes a long way in helping employees and departments to get the information they need to process and the paperwork you need for the payroll to you on time and not ten minutes after you close the payroll.

Have you used a payroll calendar before? How did it work for you? Let us hear from you.

Hey Senator! Stop Taxing My Company Cell Phone!

There are a lot of fringe benefits making the news these days. But none with as much confusion as cell phones and the taxation thereof. If you follow IRS regulations closely you know there is an entity known as the property list. Items on this list are subject to taxation if used by employees for personal use. For example, company cars are on the list. And so are cell phones. They came on the list when they were first introduced way back when they were big clunky things with battery packs. Back then only executives, company owners or those who were a bit bucks up had cell phones. Over time they have gotten smaller, smarter and cheaper. But they are still on the property list. Therefore even though they are common place at work and every second employee gets one, the personal use is still taxable wages to the employee.


Now the reason why I say they are in the news is because last year the IRS was asked to come up with a way to make the taxation easier to track and maintain. You see the only way to do it is to take each cell phone bill for each phone for each employee and total up the personal calls. For some companies this requires an army of accounts payable clerks, so they weren’t doing it. So the IRS came up with three ways to account for the usage without having to actually review each bill. Unfortunately CNN and the other news outlets got a hold of the IRS Notice announcing the new methods and asking for comments. The IRS must always ask for comments from the public before implementing a new method for this type of thing. Next thing you know CNN and the Wall Street Journal are announcing that cell phone are NOW taxable! Like they weren’t before? Of course they were. They always have been.  And it has always been enforced.

Well the blogosphere went nuts with everyone up in arms and attacking the IRS for daring to tax our cell phones. They called for the IRS to cease this taxation attempt immediately. But what was not explained was the property list and how the IRS has no control over what goes on it. It is totally controlled by Congress.

In reaction to this uproar a new bill has been debated and passed in the House. H.R. 4994, the Taxpayer Assistance Act of 2010. Introduced by Rep. John Lewis, this bill calls for cell phones to be taken off the property list immediately. It has been sent to the Senate and is currently in the Committee on Finance. But this is not the first time that the House has attempted to take cell phones off the property list. But the bill always dies in the Senate. So payroll professionals and anyone who cares about taxing fringe benefits, now is the time to act. You need to write or call your senator and let them know you want this passed in the Senate and made law.

Just remember if we don’t get this passed we are taxing cell phones as before.

Is Regular Rate of Pay Regular Enough for the 21st Century?

Since 1938 and the passage of the Fair Labor Standards Act (FLSA) employers have been mandated to calculate overtime using the regular rate of pay. Although most employees and by the way most employers understand overtime to be one and one-half times the regular rate for hours worked over 40 in a workweek. The term regular rate of pay has not been commonly understood. If you were to ask anyone in the “street” what the term means they would most likely answer ‘it’s the employee’s hourly rate”. But it has never been that. And that’s why I think we need to address the issue of calculating overtime for the 21st century. It is ridiculous for payroll professionals to have to calculate overtime by hand because they are subject to an archaic law that needs to be updated to reflect the 21st century technology and common practice.

As I just mentioned most employees think overtime is calculated by taking the hourly rate of the employee times one and one-half and then by the number of overtime hours. For example if an employee works 50 hours in a workweek and is paid $10 an hour they believe the calculation would go something like this:

40 x $10.00 = $400.00

$10.00 x 1.5 = $15.00 x 10 hours of OT = $150.00

$400.00 + $150.00 = $550 for the gross pay.

And that is how most payroll computer software calculates it. And it would be acceptable to the Department of Labor (DOL) in most cases. But the regular rate of pay is a calculated rate by law. So anything that is included in the paycheck for other items such as commissions, or shift differential or even bonuses affects the rate. So let’s do this again paying the employee a small commission of $20. Again most employees would think it should be calculated as:

40 x $10.00 = $400.00

$10.00 x 1.5 = $15.00 x 10 hours of OT = $150.00

$400.00 + $150.00 + $20 bonus = $570 for the gross pay.

And if the employer calculated it that way they would be out of compliance and subject to fines and penalties for failure to pay overtime correctly. For the FLSA actually requires the employer to pay all the items to an employee first including the straight time for all hours worked and then add on the “overtime premium”. The calculation actually should be performed as follows:

50 x $10.00 = $500.00 + $20 = $520 This is paying all the hours worked at straight time plus all other payments

$520/50 = $10.40 x .5 = $5.20 This is taking all the straight time and dividing it by all the hours worked to get the regular rate of pay and then multiplying by one-half to get the overtime premium rate.

$5.20 x 10 = $52.00. This is the overtime premium. It gets added by to the all the straight time gross

$520 + $52.00 = $572.00 gross pay.

The difference is $2 to the employee.

And computer systems cannot generally handle this calculation. Especially if there is more than one workweek involved. For example if an employee worked 45 hours one week and 47 hours the next week of a biweekly payroll and earned commissions of $20 the first week and $30 the second week each week would have to be calculated separately to determine the correct overtime payment.

This type of manual calculation was okay in 1938 when it was mandated because all payrolls were calculated by hand. Let’s face it. No companies had computers to do their payroll. And even up until the 1970’s this would have been fine. But we use computers systems now and I think the FLSA needs to reflect changing technologies. Because what tends to happen is that the employer uses the generally understood way to do the overtime, ends up out of compliance and doesn’t even understand why. It’s not fair to employers to expect them to calculate thousands of paychecks by hand because of an archaic law. Yes, it would end up costing employees some money. In our example, for instance, the employee would get $2 less in his paycheck. But the payroll department had to spend more than that to handle the calculation. And let’s face it most employees don’t even know they are supposed to be paid that way. So when the employer fails to follow the FLSA the employee doesn’t even know to complain.

Although I am a Democrat and a liberal I still think that there comes a time when laws have to reflect actual reality. I thought that the Bush Administration would address this issue but they did not, much to my surprise. So I think that the Obama administration should. By changing the definition of regular rate of pay to the generally understood one of “the employee’s hourly rate” regardless of anything else paid it would mean less confusion to the employer, the employee wouldn’t know the difference and Obama could gain some points with the business community. And most important of all, payroll professionals can stop worrying about hand calculating overtime.

What do you think?

I’m a Blogger, He’s a Blogger, You Can Be a Blogger Too!

I had originally set up Fridays to discuss the payroll profession as a whole, current events, or career development. But I have decided to go one step further. I would like to use Friday for guest bloggers. So here is your chance. If you have always wanted to blog but didn’t want to set up your own, or deal with the “crazies” on other blogs come blog with us on Fridays.


The topics will still apply. You must blog about payroll, of course. This is after all a payroll blog. But other than that the subject is open to current events such as the new health care act and how it affects payroll. Or career advancement, studying for the CPP tips. Or share with us your latest and craziest payroll story. Anything is fair game as long as it is related to payroll.

We do have to observe the normal etiquette rules of course. And they are a little stricter here. No name calling. No politics for either side unless it is the politics of payroll. This is not the place to vent anger at President Obama, the Tea Partiers, Fox News or MSNBC. You can do that on Daily Kos or Red State. But complaining about congress as a whole, the work they give payroll, the portions of bills that apply to payroll etc are certainly fair game. You can even use the blog to complain about the IRS as it relates to payroll. But remember you name is still on the blog somewhere!

The length of the blog should be around 600 words. Just type it up in Word and e-mail it over to me at payrolladvisor@cox.net by Thursday at 5pm Pacific time. I will review for rule following only. No editing and certainly no spellchecking so be sure to do both before submitting. I will then post it to the blog on Friday morning. Please give me your full name and e-mail address. I will post your guest blogger name anyway you would like me too but I need to know who submits the blogs.

I am hoping to get regular bloggers to submit blogs weekly or monthly. If you gain that status you will be given a password to the blog to post yourself.

So here is your opportunity to become a payroll blogger.

Have a great weekend. We will see you on Monday.

Here a Change…There a Change or What’s New on the Form 941 This Week

We will be using Thursdays to explain, discuss, debate and even complain about reporting requirements. This is a broad topic I know but it seems like we are always reporting something somewhere in payroll. So why not devote a day a week to examine the requirements of reporting and to bi$&h when it gets to be a little crazy from time to time. This week I will be venting about reporting.


Of course it is part of the profession to deal with IRS and state forms. But I think the last two years have really gone far and above the call of duty when it comes to reporting. My point…how many Forms 941 do we have to have in one year…two years in a row?

I have been in payroll for over 30 years and as with the rest of the payroll profession I am accustomed to having a new form at the beginning of each year. Since 1990 I have been writing manuals on payroll. So every January I gleefully wait for the new forms, check for the minor or sometimes major changes and update my books and training courses by the end of January. And the changes are rarely a surprise because we always get the draft forms to examine in plenty of time to make any needed adjustments.

But between last year and this year I am about ready to scream. Last year I had everything updated, posted to my school websites for my students and submitted to my publisher for their subscribers and BLAM! Here comes the American Recovery and Reinvestment Act with COBRA premium assistance. So in the middle of February with students half way through courses I am scrambling to update sections so the info is current and they are not learning last year’s information or form. And it seemed like it would never end. Every few days the IRS was releasing new tables within temporary publications etc. By mid-April it stopped but boy what a struggle to keep up. My payroll friends were scrambling even faster trying to get all the changes into systems to meet deadlines and learn the new form before having to file it at the end of April.

So this year I assumed it would go back to the usual one form, check for minor changes since COBRA premium assistance had been extended and that would be it until COBRA assistance finally expired sometime in 2011. BUT NO! Along comes the HIRE Act and rebates on the employer portion of social security. So now we have to file one version of the Form 941 for the first quarter that matches 2009’s last version. And then we will have a new version for second quarter that will allow us to catch up what we need to for first quarter for the HIRE Act plus what we have in the second quarter. And just when we get that all dialed in remember…the COBRA premium assistance will expire this year at some point. So you know what that means. The 2011 Form 941 will have to be changed to reflect the discontinuation of the HIRE Act as of December 31, 2010. Then it will have to be adjusted to reflect the discontinuation of the COBRA premium assistance. Since COBRA assistance is 15 months from May 31, 2010 the last premium assistance will be in August 2011. So we will have at least two forms again next year.

The next time someone dares say to me that payroll taxes aren’t that tough, just fill in one form a quarter and send it in, I will punch ‘em right in the mouth. So much for my venting on reporting. What is your take?

How Do I Know What a Best Practice for Payroll Is When I See It?

When I was planning out this blog I decided that I wanted to use Wednesdays to discuss best practices in the payroll department. But when I mentioned this to a fellow payroll professional recently her first question was really an eye-opener. She simply asked “how would I know a best practice without it coming up and biting me in the a$#? She always gets right to the point by the way. But it is a good question. If I am going to blog weekly about best practices we need a common starting point for everyone to use. So what exactly is a best practice and how do I know I have one for my payroll department.


We need a definition to get us started. So of course since I am blogging I have to go to that “supreme” source for knowledge on the web, Wikipedia for a definition. Please do read the sarcasm there. According to Wikipedia a best practice is:

a technique, method, process, activity, incentive, or reward that is believed to be more effective at delivering a particular outcome than any other technique, method, process, etc. when applied to a particular condition or circumstance. The idea is that with proper processes, checks, and testing, a desired outcome can be delivered with fewer problems and unforeseen complications. Best practices can also be defined as the most efficient (least amount of effort) and effective (best results) way of accomplishing a task, based on repeatable procedures that have proven themselves over time for large numbers of people.

Hey even Wikipedia can get one right on occasion. That is exactly the definition I am going to use for this weekly blog topic. So what we are looking for is something that a payroll department can take, a process, a form, a template, a procedure, anything that can increase efficiency, communication, or make processing the payroll easier.

Now I will be sharing my own experiences with you on what are my best practices. But this is where I am hoping that my readers will come forward. You see we all have a best practice to share. So I am asking those who comment or read to give us your best practice each week. It can be on any facet of payroll. Maybe it’s a way of organizing a payroll department, or maybe it’s a template to use when you receive a garnishment for an employee. It doesn’t matter. We want to hear all about.

Hey how often do you get asked to share your A-Game with other payroll professionals? So think about all the best practices that you use, have heard of or tried and it didn’t work (warn off all the rest of us) and be prepared to share with us next Wednesday.

But of course you can always post it this week too!

Is it Still a “Gift” Card If the Employee Has to Pay Taxes on It?

I will be using Tuesdays to discuss fringe benefits. It could be taxation or reporting or offering. This week let’s discuss gift cards and their taxation. It amazes me how confusing this topic can be to a lot of people, especially employees. Let’s say you give a gift card for a local store (Target, K-Mart, Wal-Mart etc) to an employee as employee of the week. It’s for $25. The employee expects to get the full $25 of course. They take the card, shop at the store and buy something nice for themselves or a family member spending the full $25. Then on their next payroll check he or she sees that you added the $25 to their gross, took out extra taxes and then deducted it from the net. In other words, treated the gift card as imputed income as required by IRS regulations. Now the employee is on a rampage because it wasn’t “money” they received it was a gift card and they spent the whole amount rather than allow for taxes.


That is where the disconnect seems to be. Employees and even some payroll professionals and employers do not consider anything other than actual money paid through the payroll as taxable wages. Unfortunately the IRS has a different view. Anything received by the employee for services rendered is considered wages unless the IRS specifically exempts the item. Example of an exemption would be a 401(k) deduction from income tax. The pay can be in any form and can include personal property. The IRS regulations spell out that gift certificates are considered the same as cash and are taxable wages when given to an employee for services rendered. Gift cards are merely an extension of a gift certificate. They were not included in the original law because they did not exist at the time. But they are the same thing in the eyes of the IRS.

So what recourse does Payroll have when it comes to taxing gift cards given to employees? Actually none if they want to be incompliance with IRS regulations. To make it easier on themselves payroll professionals need to make sure that everyone, from the employees receiving gift cards to the supervisors and managers issuing them that they are taxable and exactly how they will be treated in payroll.

But as we all have experienced, sometimes payroll can be overruled on taxation issues. If you are overruled and instructed not to withhold on gift cards make sure to document the instructions from superiors in case of future audits.