So, back to our series of tips for managing payroll at year-end. Do you manage more than one entity? Does your firm have more than one Federal ID number (FEIN)?
If so, review any HR transactions that may have transferred employees from one FEIN to another during the year. Why? Because the IRS rules for intercompany transfers can cause you problems if you don’t observe them correctly. Did you know that, as an employer, you are responsible to begin withholding Social Security all over again after a transfer?
If your employee transfers to a new FEIN, then you have to treat that employee as a new hire for Social Security purposes. Start withholding again, even if the employee has already reached the maximum Social Security deduction amount for the year. The employee can take a credit on his or her 1040 for the excess Social Security withheld from his/her pay.
If you find that transfers have been made, verify the cumulative Social Security wages in each FEIN and ensure that the taxable wages and tax are correct on each.
Questions? Leave a comment at the end of this post.
New York is proposing stricter standards for the use of paycards. Numerous bills have been introduced in the last 3 years. However, the New York State Department of Labor has suggested stricter rules for the use of paycards to pay employees. Comments have been solicited by the Department and the deadline for comments is November 27. The American Payroll Association (APA) has advocated for paycard use all over the country, and will attempt to meet with the Department and the governor to discuss the proposed regulations.
Some of the proposed requirements include: a list of all nearby ATM’s to be provided by each employer; the removal of all fees to be charged to the employee (including the cost of a replacement card). If you are an employer, consider your employee population and their use of checks and direct deposit.
Need more information on this topic? Do you think issuing checks is easier? We’ll share some statistics about the cost of producing hard checks in our next post. In the meantime, visit the APA Paycard Portal for more information on paycards.
See the solicitation below. I wonder if it mentions anywhere that these items, when given as gifts to employees, are taxable?
Business Ads – what’s the catch?
New York City Commuters’ Benefit
Effective January 1st, employers in New York City with 20 or more employees will be required to offer tax-protected commuter benefits to their employees.
Once the law goes into effect, employers will be given six months to comply. The New York Department of Consumer Affairs will begin enforcing the law in July, issuing fines of $250 for every 30 days a company is noncompliant. Employers will be required to keep records demonstrating that eligible employees were granted the opportunity to enroll.
If you’ve verified that wages, taxes and deductions are in balance for the first three quarters, then it’s time to check the fourth quarter! Review all year-to-date payments. Are there any outstanding negatives? Are your tax deposits in balance with your liabilities?
Find any discrepancies between your totals and your provider’s reports. If you find something, now is the tine to track it down! Don’t wait until January – now is the time. Ask yourself a few questions: Are all special payments accounted for? Are there any returned payments (payments not due to an employee)? Have all tax deposits been made? Do you need to report any equity updates, stock option exercises or other changes to income that don’t involve cash?
These types of income updates can be tricky. Look out for any changes that are coming in to you late. Don’t be afraid to process additional payrolls, whether for adjustments or for bonus or other special payments.
Joe’s Crab Shack new no-tip policy
Joe’s Crab Shack is the latest group to dip their toe into the no-tip era. They are raising prices and sharing new hourly rates across the board, the wait staff and front of the house team, as well as the kitchen staff, who generally don’t share in the tips.