Payroll

The Internal Revenue Service (IRS) has announced that the due date for providing the following 2015 forms have been extended from February 1, 2016 to March 31, 2016:

• 2015 Form 1095-B – Health Coverage
• 2015 Form 1095-C – Employer Provided Health Insurance Offer and Coverage

Also, the IRS has announced that the due date for the following forms are extended from Feb. 29, 2016, to May 31, 2016, if not filing electronically, and from March 31, 2016, to June 30, 2016, if filing electronically:

• 2015 Form 1094-B – Transmittal of Health Coverage Information Returns,
• 2015 Form 1095-B –Health Coverage
• 2015 Form 1094-C – Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns
• 2015 Form 1095-C –Employer-Provided Health Insurance Offer and Coverage

If you have any questions regarding this, please to not hesitate to contact Greg Gandy or Mike McDevitt at (719) 579-9090, and we will be happy to serve you.

(Forbes, By Robert W. Wood; Published September 2014)

You may think the IRS pursues all taxes equally but they don’t. The IRS is especially vigorous in going after payroll taxes withheld from wages that are not promptly paid to the government. This is trust fund money that belongs to the government and was withheld from wages.

That makes any failure to pay—or even late payment—much worse. In fact, that’s so regardless of how or why the employer or its principals use the money. Using the money to pay suppliers and keep the business open isn’t a good reason in the IRS view.

When a tax shortfall occurs in this setting, the IRS will usually make personal assessments against all responsible persons who have ownership in or signature authority over the company and its payables. The IRS can assess a Trust Fund Recovery Assessment, also known as a 100-percent penalty, against every “responsible person” under Section 6672(a). You can be liable even if have no knowledge the IRS is not being paid.

Being an officer or director can land you in the hot seat. If you’re a responsible person the IRS can pursue you personally for payroll taxes if the company fails to pay. The 100% penalty equals the taxes not collected. The penalty can be assessed against multiple responsible person, allowing IRS to pursue them all to see who coughs up the money first. Responsible means officers, directors, and anyone who makes decisions about who to pay or has check signing authority.

When multiple owners and signatories all face tax bills they generally squabble and do their best to sic the IRS on someone else. Factual nuances matter in this kind of mud-wrestling, but so do legal maneuvering and just plain savvy. One responsible person may get stuck while another who is even more guilty may get off scot-free.

Meanwhile, the government will still try to collect from the company that withheld on the wages. The IRS also wants to make sure this kind of bad tax situation doesn’t occur again. The government can move to shut down the business so the situation doesn’t get worse. In extreme cases the government may seek criminal penalties.

More commonly, the government may seek to enjoin this behavior. If the government thinks the situation is getting worse, it can seek an injunction. The idea is to stop the bleeding so the government gets its tax money. Where a business gets deeper and deeper into tax debts, the practice is sometimes referred to as pyramiding.

If a company is making minimal payments of tax debts, the IRS may try to induce voluntary compliance. In some cases, the Justice Department will seek an injunction to require timely deposits and payments of all withheld employment taxes and to timely file all employment tax returns. Whatever your situation, try to steer clear of these issues. Get help early.

For that matter, if you can, stay ahead of payroll taxes. Consider using a payroll service that doesn’t allow you the choice whether to use the payroll tax money for something else.

Meike Alberts, the Paychex, Inc. Payroll Consultant for Southern Colorado, passed on this important information about the Colorado Bond Interest assessment that Colorado employers are required to pay in 2012.

In order to reach solvency for the Colorado Unemployment Insurance Trust Fund and provide upfront relief to Colorado businesses, the state of Colorado has closed a bond transaction. The bond transaction allowed the state to repay loans previously borrowed from the federal government in 2010.

There are several items related to the bond transaction that will affect the majority of Colorado employers:

1.     In November 2012, Colorado employers will receive their 2013 Employer Rate Notices. Each employer will be responsible for a portion of bond repayment. The employers’ state unemployment insurance (SUI) rates will be adjusted based on the agency calculation.  Please look for this notice in your mailbox in November as it needs to be supplied to your payroll specialist so that we update your account with accurate rates for 2013. 

2.     Most employers will also be responsible to repay a portion of the interest from the bond transaction. Beginning September 2012, all Colorado employers with an experience rating less than +7 will be sent a Bond Interest Assessment. Similar to the Federal Assessment required in 2011, each employer will receive a separate assessment bill. The bill will be required to be paid within 30 days of receipt.

3.     The current solvency surcharge, established in 2004, will be removed for 2013.

4.     According to the state of Colorado, the bond transaction will save most employers between $20 and $120 per employee for 2013 and 2014. The state believes that the bonds will create the potential for future lower rates as the Unemployment Insurance Trust Fund reaches financial health more quickly.

You can read the letter here from the agency to provide additional detail about the bond assessment.

If you have any questions about how this affects you and your business, please call us at (719) 579-9090.

Deborah Helton Manager Send Email View Full Bio

As the end of the year approaches, it is important to update your payroll systems for new payroll requirements.

Beginning 2011:

• EFTPS Mandate

Virtually all businesses will have to switch to the Electronic Federal Tax Payment System (EFTPS) for all federal tax payments starting in 2011. The familiar paper voucher deposit system is going away for any company with quarterly employment tax liability of $2,500 or more. The IRS penalties for non-compliance are 10 percent for taxes paid by check.

Beginning 2012:

• Expanded 1099 Reporting

Under a mandate of the Health Care Reform and Small Jobs Act, businesses will be required to report all payments made in 2012 in excess of $600 for services or merchandise to the IRS on Form 1099. Under current law, businesses send Form 1099 for payments in excess of $600 for rent, interest, dividends and non-employee services when these payments are made to entities other than corporations. The reporting expansion now includes corporations and payments for services, including services performed on rental properties owned by an individual. The expanded reporting requirements begin with payments made in 2012.

In order to file the required Form 1099, a business would have a vendor complete Form W-9. Business owners may chose to gather need information and update accounting systems now in preparation of these changes.

• W-2 Reporting of Health Care Coverage Costs

The health care reform legislation requires employers to include the aggregate cost of employer sponsored health care coverage on employees’ W-2s for tax years starting on or after January 1, 2012. The original deadline was pushed back a year from 2011 to allow employers to make changes to their payroll systems and procedures to comply with this rule. A penalty will be imposed for non compliance beginning with 2012 W-2s. The amount reported is informational only and will not be includable in employee earnings.

If you have any questions about how your business needs to prepare for this, please feel free to e-mail Deborah Helton, CPA, or call her at (719) 579-9090.