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.