Dozens Arrested in IRS Scam

The Department of Justice announced today the arrest of 61 people in the U.S and in India for the perpetration of an unusually successful scam.  The calls to individuals threatened them with lawsuits unless the person paid up.

The money, in most cases, is lost.  The overseas conspirators, including call centers in India, used methods of transferring cash that made it generally undetectable.

The operator would threaten potential victims, the government alleges, and if the operator found someone who believed the call was real, co-conspirators would work to extract money from the victim.

“One 85-year-old California woman was threatened over nonexistent tax violations,” NPR’s Carrie Johnson reports. “Prosecutors say she turned over $12,000 to the scammers.”

The IRS will not call a taxpayer; if contact is needed, they will send a letter via USPS postal mail.  See more information on the case here.

Written Payroll Procedures

Written Payroll Procedures

Payroll processing may be tedious and repetitious, but it is also crucial to the success of any organization.  Why?  Because everyone wants to be paid, and no one wants an incorrect paycheck.  Even if an error occurs, the team and the company both want to ensure that it isn’t repeated.  One way to ensure that errors don’t occur or occur very rarely is to have and follow written procedures.

Why is this so important?  Just like with any successful business, it’s crucial to remember what works – and what doesn’t.  I’ve listed below some reasons for documenting your process and procedures; I’m you’ll be able to supply more:

  • Compliance – Your company needs to ensure compliance with Federal, state and local tax, occupational health and consumer laws.  Knowing what you do and how you do it helps you to verify your adherence to the myriad of laws that affect payroll.
  • Transparency – Clarity and availability of your procedure documents prove your team has nothing to hide and that you do the right thing in all cases.
  • Sarbanes-Oxley adherence – Whether or not you are publicly traded, your procedure documents are a road map to your work as well as your compliance with the law.
  • Training/Cross-Training – Having set written procedures and guidelines allow you to ensure that all team members learn the correct way to handle each scenario of your payroll.  Cross-training is important to ensure that all team members can handle multiple payroll responsibilities in case of illness, injury, weather-related absence or office closings.
  • Knowledge transfer – When a new employee is hired or an employee is going on leave or leaving the company, it’s important that consistency be maintained.  The written document ensures this.
  • Consistency – Each team member should handle the same task the same way.  For example, processing a new hire into the payroll system should always consist of a certain flow and a certain pattern of steps.  Each associate will process the same way if taught the same process.
  • Outsourced functions – Do you outsource your benefits, pension, or payroll tax administration?  Include your links to and from these organizations in order to clarify your workflow.
  • Pain points – review to see where problems, errors and delays arise.  Take steps to document and create solutions.  Identify areas for improvement.
  • Process improvement – creating work flows and reviewing steps allow you to step back and look at the process while not actually performing it.  This may give you an idea for streamlining the step.  You may also find that you question a particular part of a process and can possibly find a shorter way to complete the task.
  • Reducing the complexity of the process – putting the documentation “on paper” makes it easier to use and preserve, as well as providing a physical location for your documentation that can be given to your team as well as to management upon request.  Also, the very act of writing procedures allows you to simplify and clarify your thoughts and what you do.
  • Enabling emergency operations – unfortunately, we never know when something major will happen that will keep many employees from getting to the office.  Having documentation allows substitutes or managers to help with disaster recovery.  Disaster may mean anything from a flood to an emergency shutdown of a facility to a blizzard, so it is important to be prepared.  Payroll usually can’t be put off.

How do you create these documents?

Gather a team of your payroll associates and supervisors.  Have a meeting or series of meetings to lay out your processes.  The group effort will bring out more nuance and detail than using just one person’s thoughts.

  • Begin by making a survey of all your team’s responsibilities.  Time collection, funding requests, report generation, employee/customer service requests, and employment verifications – this is a sample list of responsibilities that may fall under payroll’s umbrella.
  • Gather up relevant illustrations – payroll schedules, company information (crucial if you pay under multiple FEIN’s), copies of forms, sample registers (redact where necessary), new hire packages, enrollment forms.  Use these as a map to begin the process of capturing all the steps to completion.
  • Brainstorm with the team and begin making outlines.  If you like, assign each process or procedure to a person or group.  However, don’t let go of them altogether.  Keep a firm meeting schedule with the team until the tasks are completed.
  • Once you have begun, make sure that the team tests the written processes.  Do they actually work the way they are written?  Is a step missing?  Does something need to be deleted?  This is a good exercise in procedure.
  • Identify the look you want for your manual.  A uniform look is best, utilizing the company logo, fonts, etc.
  • Is your payroll outsourced, or SAAS?  Use your system’s documentation for additional material.  Screen shots, tables and other materials will help clarify the meaning of a specific task.
  • Decide the best way to save and distribute your manual – paper, shared drive, email, etc.  You may want to keep a hard copy just in case.
  • Develop a mechanism for change control.  This may entail putting one person in charge of keeping the manual updated, as well as developing version numbers and dating.  This will allow all team members to know that they have the latest version available.
  • This is an important deliverable for your team.  If no one is able to create these documents, try to identify an outside resource – a knowledgeable consultant or simply an experienced writer.  That resource can assist you from beginning to end.

No matter which option you choose, get started today!

Caveat Emptor!

The State of Maryland is scrutinizing all PSP’s (Payroll Service Providers) as the result of a recent case involving a provider, AccuPay, that allegedly mishandled client funds.  The principals, husband and wife Kevin and Beverly Carden, were sentenced to prison terms for wire and mail fraud respectively, in connection with accepting clients’ money for periodic tax filings without actually paying the entire amounts over to the respective Federal and state entities.  Read more about the case here.

“When customers realized that the money they entrusted to AccuPay was not being used as intended to pay their taxes, Kevin Carden misled them with false cover stories,” said U.S. Attorney Rod J. Rosenstein. “What really happened was that Kevin and Beverly Carden took money intended for the IRS and spent it themselves, causing millions of dollars in losses to their customers.”

“It is unacceptable to help yourself to other people’s money and violate their trust,” said Thomas Jankowski, Special Agent in Charge, IRS Criminal Investigation, Washington D.C. Field Office.  “Today’s sentencings serve as reminders that this criminal behavior was inexcusable and IRS-CI is committed to bringing culpable individuals to justice.”

.This case should serve as a reminder to all clients of PSP’s that they are ultimately responsible for their tax filings and payments.  Even if you use a service to outsource your payroll and/or tax filing, you must have procedures in place to verify that your deposits and tax returns have been deposited and filed timely.

Your internal audit and compliance teams must have procedures in place to verify deposits and reconcile them to your bank accounts, as well as to your general ledger.  Its no one’s responsibility except yours.


5 reasons using Excel may be holding your business back — The savvy bookkeeping blog

Excel is a great tool for business. I like to use it to manually check payroll calculations, particularly when setting up new accounting software for a client. However, it’s not always the best choice for business bookkeeping. Here are 5 reasons that it might be time to move on from Excel: 1. Doubling-up of transactions […]

via 5 reasons using Excel may be holding your business back — The savvy bookkeeping blog

Job Market – NYC

Taking the temperature of the labor market in New York City.  Wait for it – the job market is alive and well in NYC.  Let’s see what the governor and the Department of Labor have to say:

The statewide unemployment rate decreased from 4.9% to 4.7% in May 2016. This represented the state’s lowest unemployment rate since August 2007. New York’s unemployment rate was equal to the U.S. rate in May 2016. In addition, the number of unemployed New Yorkers also decreased over the month – falling from 476,600 in April to 461,800 in May 2016, reaching its lowest level since October 2007.
New York State’s private sector job count declined by 19,600, or 0.2%, in May 2016. About half of the state’s private sector job losses in May were temporary, due to a strike in the telecommunications industry. Since the beginning of Governor Andrew M. Cuomo’s administration, New York State’s economy has added 794,700 private sector jobs and experienced employment growth in 56 of the past 65 months.
Regardless of the political climate, it appears that people are working in New York.  It also appears that an increase in the minimum wage has not negatively affected jobs in the city.  Anecdotal evidence from the local business reports also bears out the fact that employers are having a hard time filling jobs.  This can mean that the labor pool is unqualified.  It can also mean that employees are changing jobs again, because the climate has improved from a time when “if you have a job, keep it” was the mantra.

When wages rise, employees may find that they want to look for something better.  When employees move, jobs become available.  When employers look long enough for the right person, wages also rise.  Sounds oversimplified, and it is.  There is enough movement, however, to move towards cautious optimism.

Sounds like some good news for a Friday!