It takes more than a little confusion to get a payroll specialist worked up. A new wrinkle in the regulatory landscape? Looming deadlines? It’s all in a day’s work for the people who make sure all the other people get paid.
So when the American Payroll Association warns the government that its members are starting to panic, you’ve got to pay attention.
Many tax and accounting professionals share their unease as the largest tax overhaul in decades takes effect less than two weeks after it was passed.
Unanswered Questions and Difficult Transitions
New tax brackets aren’t the only wrinkles on the landscape. The APA also identified complications arising from multiple provisions contained in the bill as of December 8. They warned that these provisions would need to be clarified for accurate payroll tax accounting:
An apparent increase in the supplemental withholding rate that affects things like bonuses, commissions and stock compensation
Repealed exemptions that would turn many fringe benefits, like reimbursed moving expenses and education assistance, into taxable wages
And on a more basic level, everyone will have to find their place in the new withholding tables. New W-2 and W-4 forms may have to be completed. The IRS has said it will issue new guidance in January and that employees should begin seeing the effects of any changes to their paychecks by February. But payroll industry leaders are not hiding the fact that they are expecting a bumpy transition.
“Putting something into effect a week after it’s signed—I don’t know how you can expect good results,” Mike O’Toole, senior director for publications, education and government relations at the American Payroll Association, told Politico.
Payroll Association Proposes a Penalty-Free Transition Period
The APA, whose 21,000 members represent 17,000 employers, called for a one-year, penalty-free transition period for any payroll tax errors. In its letter to lawmakers before the bill’s passage, the APA said that the law’s effect on withholding provisions would create a “herculean task” for payroll professionals. The association’s request for relief made it into the bill in the form of some IRS flexibility in setting 2018 withholding rules, according to the APA website.
Get the Expertise You Need To Get Your Payroll Taxes Right
Whatever the result, it will be just as important to get your payroll taxes right. Don’t let transition woes get you off to an uncertain start in 2018. Get ahead of the pack and put the panic behind you with custom solutions from the experts at Payroll Tax Management. With expertise that covers more than 11,000 taxing agencies across the country, it takes a lot more than 500 pages of paper to scare us.