Debby is Director of Payroll Information Management for Ernst & Young LLP’s Employment Tax Advisory Services. Her experience in payroll research, process and audit, publishing, and advocacy is applied both internally and externally through publications, webcasts, training and project management with a federal, state and local employment tax compliance focus. Debby also functions as a subject matter leader on projects involving payroll and employment tax requirements.
Most recently, Debby was responsible for the design and implementation of a software-enabled system for quickly identifying tax and reporting configuration errors with payroll system earnings and deduction codes.
Debby is Editor-in-Chief of the monthly journal, Payroll Perspectives, and is the author of Principles of Payroll Administration and the Payroll Practitioner’s Compliance Handbook, published by Research Institute of America, and Mastering Payroll, published by the American Institute of Professional Bookkeepers.
Debby is a Certified Payroll Professional (CPP) through the American Payroll Association.
Ernst & Young LLP has published several materials to assist employers in navigating the employee Social Security tax deferral that is effective September 1, 2020 through December 31, 2020. Click on the links below to access these materials.
As the payroll rules continue to expand in scope and complexity, more businesses are turning to outsourcing. While payroll outsourcing can reduce technology and administrative costs, it does not replace the need for experienced professionals with an understanding of payroll rules and a focus on governance.
In this special report from Ernst & Young LLP, a careful examiniation is given of the roles and responsibilities that continue to apply when the payroll function is outsourced. The report includes a scorecard that readers can use to determine how well they are governing their third-party payroll arrangements.
You can download the full report from the link below.
According
to new
sources, senior White House officials were in preliminary
discussions on August 19, 2019 about a possibility of a reduction in payroll
taxes, as well as other tax breaks, to bolster a slowing economy. In a press conference on August 20,
2019, President Trump denied concerns over the economy but did confirm that his
Administration is looking at payroll and capital gains taxes.
While
President Trump did not elaborate on how he defines payroll taxes, the term is
typically used to describe the Social Security/Medicare (FICA) taxes that are
paid by both employees and employers.
Social Security tax is 6.2% of annual wages up to $132,900 for 2019 and
Medicare tax is 1.45% of all covered wages.
Because
FICA taxes are credited to trust funds that pay for federal retirement and
disability benefits, proposals to reduce employer/employee contributions are
typically dead on arrival. However,
President Obama was successful at enacting economic stimulus legislation that directly
or indirectly put a portion of the FICA tax expense back into workers’ pockets
with subsidies from the general budget.
Payroll
tax cuts under President Obama
To create
economic stimulus in response to the recession that triggered in 2008,
President Obama stewarded two provisions through Congress that put a portion of
worker’s FICA taxes back into the economy. It is emphasized that both
provisions were funded by general revenues thereby adding to the national
debt.
The Making Work Pay tax credit. For 2009 and 2010, a refundable tax credit was available of $400 to working individuals and $800 to working families. The credit was calculated at a rate of 6.2% on earned income for 2009 and 2010 and phased out for taxpayers with adjusted gross income over $75,000 ($150,000 for married couples filing jointly). Employers delivered the credit to their employees by reducing their federal income tax withholding by the amount of the credit as computed for the periodic wage payment. Any portion of the credit that was not delivered by the employer through payroll checks as of December 31 could be claimed by eligible taxpayers on the Form 1040. The cost of the credit was funded by general revenues and not the Social Security trust fund.
Social Security tax cut. In 2011 and 2012, the Social Security tax rate that applied to employees and self-employed individuals was reduced by 2.0% but employers were subject to the full 6.2%. Like the Making Work Pay tax credit, the 2% reduction in workers’ Social Security taxes was funded by general revenues and not the Social Security trust fund.
Observations
Thus far, the President has not
presented a formal proposal to Congress for vote that would offer workers a
reduction in their FICA taxes. It is
worthy to note, however, that should the nation face a recession similar in
severity to that in 2008-2009, we may see a return to those Obama-era payroll
tax cut provisions.
Here is an interesting article on the high risk businesses take in calling their workers independent contractors to avoid the Obamacare employer mandate.
