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.