By William Dunn, CPP
Just weeks away on March 11-12, APA's Capital Summit will provide a venue for federal officials to discuss how government initiatives will impact the payroll profession. Capital Summit will take place at the Omni Shoreham Hotel in Washington, D.C., and is the place to be for payroll professionals looking to hear the inside scoop from those inside President Obama's administration.
Sens. Orrin Hatch (R-Utah) and Charles Schumer (D-N.Y.) recently used an Op-Ed article in The New York Times to propose a new tax option to create jobs--eliminate the employer's share of social security tax for the rest of 2010 for any newly hired employee who has been out of work for more than 60 days. It would apply only to the private sector and only for employees working at least 30 hours per week. They say it won't be an administrative burden.
"And since it is an elimination of the employer's share of the SS tax for these workers--rather than a fixed or capped dollar amount--the complexities of making the incentive work with a firm's payroll software are greatly reduced because employers will know simply to zero out the tax for these workers," the two senators said.
Attend Capital Summit and hear what the experts have to say about the Senators' plan.
New Directions in Immigration Enforcement
APA is working with the Department of Homeland Security (DHS) to improve the E-Verify system and also to improve DHS's communications with employers regarding employment eligibility verification.
A panel discussion will focus on changes to Form I-9, DHS's change in enforcement from a reactive to a proactive approach, E-Verify implementation requirements for federal contractors, and benefits of the Immigration and Customs Enforcement's IMAGE Program.
The panel will include:
*Shannon Slattery, Management and Program Analyst with Citizenship and Immigration Services (CIS)
*Adam Wilson, Acting Section Chief with Immigration and Customs Enforcement (ICE)
*Dave Fowler, Vice President of Product Strategy with TALX Corporation, and the Chair of APA's Government Affairs Task Force Subcommittee on Immigration
What's New at Our Federal Agencies?
This month the IRS began the first of 6,000 random employment tax audits to take place over the next three years, which are intended to help the agency focus its resources on the industries and practices that contribute most to the tax gap. John Tuzynski, Chief of the IRS's Employment Tax Operations, Small Business/Self-Employed Division, will discuss the audits as well as proposals regarding substantiation and taxation of employer-provided cell phones, supplemental W-4 instructions for nonresident aliens, and the effect of the Making Work Pay Credit on the 2010 tax-filing season and related tax table and W-4 changes for 2010.
APA's IRPAC representative, Emily Lindsay, CPA, Executive in Residence at the Kogod School of Business at American University, will tell you how APA is working with the IRS to decrease your burden.
The economic downturn of the past year has many wondering about the legality of reducing employees' hours or pay through furloughs and salary reductions. George Ference and Carl Smith, Deputy Regional Administrators of the Department of Labor's Northeast Region, will explain how the economic downturn affects the rulings and enforcement efforts of the Department of Labor.
Could a change in the way the Social Security Administration (SSA) assigns SSNs affect your payroll processing or the wage files you submit to outside parties? Chuck Liptz, Director of the SSA's Division of Electronic Services Support and Communications, will discuss a plan to randomize the issuance of social security numbers in an effort to prevent identity theft and also discuss SSA's redesign of its annual wage reporting system.
The Office of Child Support Enforcement (OCSE) continues to progress in its movement toward electronic delivery of income withholding orders and medical support orders using programmable PDF technology. Sherri Grigsby, Manager of OCSE's Employer Services Team, will explain how this technology will improve child support collection and reduce employers' administrative burden. Grigsby will also discuss developments in withholding from lump-sum payments as well as recent legal action that may decide once and for all that all child support remittances should be paid to state disbursement units rather than to custodial parents or their representatives.
Payroll's Responsibility in Data Protection
To protect taxpayers' personal information, the IRS is piloting a program for masking the social security number on documents such as Form 1099. This could be the start of a much bigger trend, and may eventually apply to the W-2. Amber Smith, Attorney-Advisor with IRS's Division of Privacy, Information Protection, and Data Security, will explain the details.
Portions of the FTC's Red Flags Rule have been delayed repeatedly and the FTC is not currently enforcing it. Manas Mohapatra, Attorney with the Federal Trade Commission's Division of Privacy and Identity Protection, will discuss how the rule may apply to employer benefits plans--thereby defining an employer as a "financial institution"--and the likelihood that the rule will ever become effective.
For payroll professionals who have considered how data privacy applies directly to the payroll department, the APA Data Privacy Subcommittee of the Government Affairs Task Force is cataloging some best practices. Andrew McDevitt, Chair of the subcommittee and Senior Manager of Government Relations for Intuit, will discuss the subcommittee's progress.
PAYTECHonline Readers Weigh in on 1099 TIN-Masking
By Scott Mezistrano, CPP
Masking a taxpayer identification number should be a required practice to promote data security, according to 59% of respondents to the PAYTECHonline poll. In addition, TIN-masking should be expanded to more forms than those currently allowed by IRS, and it should be allowed on statements to businesses as well as individuals.
However, as to whether a payer should be required to include the complete TIN on the payee statement if requested by the payee, 53% said "No, and it shouldn't even be optional, so as to avoid differences between payers that adopt TIN-Masking."
Below are the questions we asked in the poll that ran in the December 2009 and January 2010 issues of PAYTECHonline, along with the breakdown of responses and sample comments from you. APA will be using this information in its comments to IRS on its revenue procedure that allows TIN-masking on paper Forms 1098, 1099, and 5498 issued to individual payees. This is a pilot program for tax years 2009 and 2010, and public reaction will determine whether it will be continued and expanded. Expansion to Form W-2 would take congressional action, but they will likely be watching the comments to IRS.
Question 1
The IRS now allows you to mask an individual payee's nine-digit TIN on paper copies of Forms 1098, 1099, and 5498 that you provide to payees. Should the IRS require TIN-masking on these paper payee statements?
59%--Yes
"Paper documents can easily fall into the hands of people for whom they were not intended."
41%--No
"Some companies do not have the technology to easily accomplish this."
"There is no other way for the payee to confirm that we have reported under the correct TIN."
Question 2
Should the IRS allow TIN-masking on payee statements issued to businesses? (The new IRS revenue procedure does not allow you to mask employer identification numbers)
59%--Yes
"We need consistency. It will be more difficult if one type of TIN can be masked but another type cannot."
41%--No
"Payees--individuals and businesses--should have the opportunity to verify their number on each document."
Question 3
Should the IRS permit or require TIN-masking on payee statements furnished electronically? (The procedure currently applies only to paper statements.)
53%--Yes--permit
"Consistency in processing for the payer."
"Requiring this rather than permitting it would put an unnecessary burden on employers and service providers. Statements furnished electronically are already protected by several layers of security."
22%--Yes--require
"To protect payees from identity theft by hackers on the Internet."
25%--No--do not allow
"How would the payee confirm his information?"
Question 4
Should the IRS permit or require TIN-masking on paper payee statements besides those in the 1098, 1099, and 5498 series?
28%--Yes--permit
"It should be the payer’s choice."
34%--Yes--require
"To protect payees from identity theft if their mail is stolen."
38%--No--do not allow
"Payee needs to know that data was correctly reported under her number."
Question 5
Should a payer be required to include the complete TIN on the payee statement if requested by the payee?
25%--Yes
"Allow for choice among those directly impacted."
22%--No, but the payer should be allowed to offer this option to its payees.
53%--No, and it shouldn't even be optional, so as to avoid differences between payers that adopt TIN-Masking.
"Allowing the option could result in pressure on some payers, who would then have the burden of modifying their systems to allow payees to request their complete TIN."
What Is TIN-Masking?
TIN-masking can be accomplished by replacing the first five digits of the nine-digit number with asterisks or Xs. For example, the SSN 123-45-6789 would appear as ***-**-6789 or XXX-XX-6789. TIN-masking is not allowed on statements submitted to IRS. You can read all the details in PAYROLL CURRENTLY, No. 23, Vol. 17, which includes a link to the IRS revenue procedure.
In a prior PAYTECHonline poll, 74% of respondents said they would mask TINs on Forms 1099 for tax-year 2010. See PAYTECHonline, May 2009. If you have any other thoughts or concerns about TIN-masking that should be shared with IRS, write to me at smezistrano@americanpayroll.org. Use "TIN-Masking Comments" as your subject line.
Dispose of Returned W-2s If You Can Reproduce Them Electronically
Now that you've gotten Forms W-2 out to your employees, undoubtedly a few have come back in the mail. Here's a piece of great news: if you can electronically reproduce a Form W-2 that you weren't able to deliver, then you do not need to keep the original! Think of all the bins or drawers of returned W-2s that won't be taking up room in your office anymore.
APA has been asking for this for a few years via the Federal Tax Forms and Publications Subcommittee of our Government Affairs Task Force and our participation on the IRS Information Reporting Program Advisory Committee. We're very happy about this.
For the specific authorization from IRS, see page 3 (second column) of the 2010 Instructions for Forms W-2 and W-3.
Submit Your Payroll Puzzlers for the 2010 Federal Forum
Answers Will Be Provided at Congress and in Payroll Currently
One of the most popular and well-attended events at APA's Annual Congress is the Forum on Federal Payroll Issues workshop. During this session, APA members do their best to stump top experts with some of the trickiest payroll questions possible. The answers are provided by a panel of high-level representatives from federal agencies.
The questions come from you, our members. So, send us your most difficult payroll question--this is your chance to solve that payroll mystery that’s been nagging you for months. Or maybe there's a topic that seems to be explained a different way every time you read up on it, and you'd like to get an authoritative answer.
The questions are provided to panelists about one month in advance to allow time for research and to ensure a complete answer. Send your question by March 19 to smezistrano@americanpayroll.org.
You can pose a payroll problem to any of the following agencies. But don't worry if you're not sure which agency should address your scenario--we'll take care of that.
* Internal Revenue Service
* Social Security Administration
* Office of Child Support Enforcement
* Department of Labor
* Citizenship and Immigration Services
* Immigration and Customs Enforcement
To be there in person when your question is answered, register for the APA's 28th Annual Congress, being held May 25-29 just outside Washington, D.C. But even if you can't come to Congress this year, you may still be able to get your answer since many of the questions and answers are written up for our Payroll Currently membership newsletter. Last year's Congress Q&A appeared in a special report at the end of Issue No. 13.
