Payroll Legal Alert

Q: An employee who’s in line for a quarterly bonus has presented Payroll with a form that requires us to treat the bonus as regular wages and withhold accordingly. It’s our policy to use the 25% flat withholding method on all supplemental pay. We’ve never seen a form like this before. Must we honor it?

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Employers that outsource their payrolls to third-party payroll providers have reported receiving phony emails referring to “Password Change Notification” or “First Notice—Digital Certificate Expiration.” It’s a scam.

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Q. A contractor would like us to voluntarily withhold her federal income taxes. Accounts Payable isn’t equipped to do this, so it’s fallen to Payroll. Having her complete a W-4 form seems inappropriate, since she’s not an employee. Can we honor her request?

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Undeposited payroll taxes can pile up so quickly that the IRS has a name for them—pyramiding. It also has a very effective solution: personally charging a company’s responsible persons with 100% of the undeposited taxes. Relief: an express installment agreement.

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NOTE: Saturdays, Sundays and legal holidays as observed in the District of Columbia are taken into account to determine due dates. Under the federal deposit rules, you’re allowed a deposit shortfall of the greater of $100 or 2% of your tax liability.

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The IRS has made several permanent and temporary changes to its Voluntary Classification Settlement Program. Under VCSP, you can voluntarily reclassify independent contractors as employees for future tax periods on favorable tax terms. You’ll be liable for just over 10% of the wages paid to those reclassified workers for the past year; no penalties or interest will be due.

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Final regulations issued by the Department of Labor implement the FMLA’s military exigency and caregiver leave provisions and make some additional clarifying changes to the FMLA regs in general.

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Under the federal sequester, a federal contractor may be forced to rejigger its workforce through reduced hours or furloughs. The problem: Under the FLSA, exempts must receive a full week’s pay if they do any work during the week. You have three options.

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Weather-wise, it’s hard to say exactly when spring arrives. What’s not subject to debate is the fact that your first-quarter 941 form is due shortly. Here’s help.

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The Affordable Care Act requires employers of 50 or more full-time em­­ployees to offer them affordable health benefits—or pay free-rider penalties. Benefits are affordable if employees’ contributions don’t exceed 9.5% of their household income and employers pay at least 60%. The IRS has created three optional affordability safe harbors.

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