Payroll Legal Alert

It would be great if you could wave a magic wand and convert some of employees’ taxable wages into nontaxable business reimbursements. But you can’t. A new revenue ruling reiterates that employees’ expenses must have a business connection before you can reimburse them tax-free.

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A court has ruled that the IRS doesn’t have to return to defrauded clients a bankrupt payroll service bureau’s tax deposits that were collected from them but were used to make deposits for other clients. The defrauded clients, therefore, have paid twice …

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The Fair Labor Standards Act and the IRS can throw kinks into your holiday plans. Watch out for these lumps of coal: four rules on holiday pay, two rules for holiday work, requirements for holiday hiring.

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Regardless of what you call it, tips are amounts customers willingly determine and leave of their own accord; service charges are added to the bill. According to a new IRS revenue ruling, service charges are immediately taxable as wages; tips are taxable when employees report them to you.

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This year, completing W-2 forms will be even more challenging for employers that must report employees’ health benefits. Here’s the scoop on what you need to know to get W-2s right the first time.

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Question: How do we report an employee’s health benefits if he transferred between two divisions of the same company, and each division has its own Employer Identification Number? Must each division report separately, or can we combine this information and report it on one W-2?

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As you’re feasting on your Thanksgiving dinner this year, don’t let year-end responsibilities eat you up. You can ease year-end Payroll concerns by ticking off some key tasks now.

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Year-end Payroll duties can keep you from enjoying this holiday season. But it doesn’t have to be that way, if you get through these year-end duties.

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An S corp couldn’t get away with paying its sole shareholder-employee $24,000 a year in FICA-taxable salary, while also paying him large FICA-free dividends. According to a recent federal appeals court ruling, such an arrangement isn’t reasonable.

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The W-2 year-end process is burdensome enough. The last thing you need to worry about is back-up withholding from payments made to independent contractors and filing Form 1099-MISC. Here’s what you need to know for the 2012 filing season.

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