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.
Friday, May 7, 2010
Thursday, May 6, 2010
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?
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?
Wednesday, May 5, 2010
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!
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!
Tuesday, May 4, 2010
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.
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.
Monday, May 3, 2010
Let's Have Lunch?
Mondays we will be doing Wage and Hour Law compliance. That is a broad subject so we should be able to get some good discussions going. Today I want to blog 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. For those new to wage and hour law or perhaps are confusing federal law with state law let me recap the requirement under the Fair Labor Standards Act (FLSA).
Per the DOL website: Federal law does not require lunch or coffee breaks. However, when employers do offer short breaks (usually lasting about 5 to 20 minutes), federal law considers the breaks as compensable work hours that would be included in the sum of hours worked during the work week and considered in determining if overtime was worked. Unauthorized extensions of authorized work breaks need not be counted as hours worked when the employer has expressly and unambiguously communicated to the employee that the authorized break may only last for a specific length of time, that any extension of the break is contrary to the employer's rules, and any extension of the break will be punished. Bona fide meal periods (typically lasting at least 30 minutes), serve a different purpose than coffee or snack breaks and, thus, are not work time and are not compensable.
The DOL instructs how to pay it but not to actually give it. 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 today 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?
Per the DOL website: Federal law does not require lunch or coffee breaks. However, when employers do offer short breaks (usually lasting about 5 to 20 minutes), federal law considers the breaks as compensable work hours that would be included in the sum of hours worked during the work week and considered in determining if overtime was worked. Unauthorized extensions of authorized work breaks need not be counted as hours worked when the employer has expressly and unambiguously communicated to the employee that the authorized break may only last for a specific length of time, that any extension of the break is contrary to the employer's rules, and any extension of the break will be punished. Bona fide meal periods (typically lasting at least 30 minutes), serve a different purpose than coffee or snack breaks and, thus, are not work time and are not compensable.
The DOL instructs how to pay it but not to actually give it. 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 today 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?
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