Payroll Update Letter
July 2, 2010
To our payroll clients:
I hope this letter finds you all doing well. It’s hard to believe the second quarter of 2010 just ended, and we’re entering the second half of the year! So much has happened this year for some of you, and my firm is no exception, and I wanted to update you on some recent issues that will affect you.
PAYROLL SERVICES – I have made a decision to allow Sherry Myhand, my former partner, handle all our payroll-related services. I have engaged her firm to assist, and while nothing will change from your perspective (you will still drop off materials to my office, you will come here to retrieve completed work, you will be invoiced by my office for work performed, you can still call here with questions), you may received e-mails from her with questions from time to time. Her e-mail address is payrolladmin@godwincpa.com. I would like for each of you to record this e-mail address in your contacts list and use it for any payroll-related questions that may arise. I will be checking the e-mail as will Sherry so that nothing will be overlooked. I am happy to be working with her again.
EFTPS AND SC online ENROLLMENTS – I have contacted several of you over the past months with regard to enrolling in EFTPS and “SC online” for your payroll tax deposits. This will be mandatory effective January 1, 2011 so I am trying to be proactive in the enrollment process so that no one is faced with attempting to enroll in December as the year is closing. For those of you who have already responded and sent me the information I needed, I thank you. However, some of you haven’t yet responded and consequently I haven’t enrolled you. I will cease to prepare paper tax deposit coupons effective September 30, 2010, so if I haven’t enrolled you at that point, you will then be responsible for preparing your coupons for submission. I will only assist in completing EFTPS and “SC online” transmissions effective October 1, 2010. The electronic processing of payroll tax deposits is a time-saver for you and for me, so trust me when I say this is a positive move for all. The penalties for noncompliance with IRS are very steep, as you know, so I encourage you to send back the signed confirmations and requested information so I can enroll you immediately.
PAYROLL FEES – Some of you will see an increase in your monthly payroll fees as well as quarterly payroll tax preparation fees. For the most part, those fees have remained frozen for the past two or three years for those of you who utilize our services for net check calculation and payroll tax deposit processing only (not for check printing or direct deposit). There will be a slight increase in your fees, of which you will be notified individually under separate cover.
FORMS W-9 AND W-4 – You will need to make sure that I have current information on all your employees and subcontractors for submission of Forms W-2 and 1099-MISC in January 2011. Please go to www.irs.gov and download Forms W-4 and W-9 for distribution to your employees and subcontractors to ensure accurate forms preparation. IRS penalties for incorrect information (names, addresses, social security numbers and federal ID numbers) continue to increase, so it’s very important that you have and retain current information on all your employees and subcontractors. Those forms are for your files only.
UPCOMING CHANGES – Starting in 2011, employers are required to report the value of company-provided health coverage on the W-2’s for its employees. The amount listed is not taxed as income, but it’s purely there for information. This will be something that has to be monitored by YOU beginning next year. I will need to know how much of each employees’ health insurance was paid by your business, so please see me if you have any questions on how to keep track of this. Please don’t wait until 2012 to start keeping those records, because it will be impossible to go back for the entire year for each employee to track this.
Starting in 2012, the health care bill has imposed a reporting requirement that I have already alerted some of you to. This new provision requires that 1099-MISC forms be sent to EVERY service and goods provider with which you do business, if you pay that service and goods provider more than $600. Think about that…AT&T, Office Max, Publix, Best Buy…and all the subcontractors to whom you already submit 1099’s. So, keep this on your radar. The only exemption is for payments made by credit card to goods and service providers. Do you see where this is going? IRS is pushing you to use electronic means to pay vendors so that those payments have NO change of being overlooked as income for the recipient. The use of paper for transactions is about to be obsolete….even though there has been no exemption for online submission of checks to the vendors.
I am looking into the possibility of utilizing electronic filing means for filing quarterly and annual forms this year, like 941, 940, W-2’s, W-3’s and 1099’s. I don’t yet have all the information, but I’ll keep you posted. The firm has been paperless for several years now, and it just makes sense to utilize the technology if it exists.
In keeping with technological changes, I will also be filing your corporate tax returns (Federal only at this point, as SC doesn’t yet have a comparable platform or software application) electronically beginning with the 2011 filing season. I will be required to file all individual tax returns electronically beginning with the 2011 filing season for the first time, by federal ruling, so we are going to move toward electronically filing all annual tax returns. There won’t be a separate fee for electronic filing.
There will be more to come. I will keep you updated as I hear new things, either by letter or by posting things on our website, www.godwincpa.com. I encourage you to periodically check the site to be sure that you are aware of all the changes. I will continue to post updates as they become available as well as e-mail you where practical. I wish all of you a wonderful summer and look forward to seeing you later this month!
Sincerely,
Jonathan I. Godwin, CPA