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‘Summertime and the livin’s easy’ but not for Payroll

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The end of July means quarterly filing deadlines with the IRS. In addition, the federal Office of Child Support Enforcement’s (OCSE) grace period for the new Income Withholding Order, or IWO for short, will run out on July 31.

2nd quarter Forms 941s move to the MeF platform

Reporting agents and other filers who filed at least 5,000 Forms 941 last year should complete their migration to the IRS’ new electronic filing platform, MeF, by July 31. Filers should use MeF for all current and prior Forms 941.

Warning: The IRS is putting in place parameters that will allow it to restrict returns submitted through its legacy systems to ensure that the MeF migration requirement is met. However, you may continue to use the IRS’ legacy PIN-based Online E-file Method for all four 2015 forms.

The remaining timeline for the MeF transition is as follows:

  • Reporting agents and other filers who filed fewer than 5,000 forms in 2014 should complete their migration to MeF by Nov. 2, 2015, the due date for the third-quarter return
  • All fourth-quarter 2015 forms (due Feb. 1, 2016) must be filed through MeF.

Grace period ends for old IWOs

All child support withholding orders must be issued on IWOs. When the OCSE issued the revised IWO last year, it gave a one-year grace period, until July 31, 2015, to adopt the new form. Highlights of the changes to the IWO include the following:

  • Instructions for withholding from independent contractors. Payments made to independent contractors aren’t covered under the Consumer Credit Protection Act (CCPA), since the CCPA’s limits apply only to wages. Employers, therefore, need to know the withholding limits that apply to payments made to contractors. The revised IWO reflects this by letting states indicate this information.
  • One IWO for each IV-D case. The instructions clarify that each IWO should apply to one noncustodial party, with the appropriate custodial party and children.

The OCSE says that after July 31, you must reject any IWO that isn’t prepared on the new form. If you reject an IWO that’s issued on an old form, return it to the sender and request an updated IWO on the new form.

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