It is no secret that employers are often confused by federal and state payroll taxes. That is why so many of them turn to third-party payroll providers like Dallas-based BenefitMall. They trust that professional payroll providers understand tax regulations better than they do.
Is the IRS doing anything to clear up the confusion? Yes. On August 1 (2019) the IRS conducted a 60-minute webinar for employers and tax professionals. The webinar was intended to educate on a variety of topics ranging from filing to making good on delinquent taxes.
Those interested in participating in the webinar were required to register online. It is not clear at this time how many participants there were, nor do we know if those numbers will ever be made public.
What It Covered
An official release introducing the webinar was titled “IRS Civil Enforcement: Field Collection Enforcement and Employment Tax Compliance.” This suggests it was more about enforcement than anything else. Prospective participants who went online to register learned that the webinar covered the following:
- What accrues employment and payroll taxes
- How to mitigate risks when utilizing third-party providers
- Tools available to employers for monitoring risk and compliance
- Options for making good on delinquent employment and payroll taxes
- A discussion of IRS enforcement authority.
The session also included a live Q&A period. It would have been fascinating to be a fly on the wall during that portion of the webinar. Participants probably asked a few highly technical questions without clear answers.
Why Such Sessions Are Necessary
At first glance it might seem as though the IRS webinar was really not needed. After all, employers have been dealing with payroll taxes for decades. Yet business taxation gets more complicated by the year. Even something as simple as redesigning the W-4 form to account for changes in the tax law can create tons of questions.
It would be one thing if our tax laws were simple and unchanging. But they are not. Tax laws are constantly changing. Sometimes changes are politically motivated while other times they make good business sense. Yet regardless of the impetus behind them, rule changes almost always result in employers having to rethink how they handle payroll taxes.
The other thing to remember is that compliance is always a thorny issue. The IRS and state taxing authorities do have significant discretion when it comes to compliance. The problem is that employers never know which way it’s going to go. One employer could face aggressive enforcement actions while another is let off with a slap on the wrist.
Outsourcing Payroll to a Third-Party Provider
The solution to payroll tax compliance for many employers is to outsource their payroll to a third-party provider. According to a December 2014 report by Deloitte, nearly half of all U.S. employers engaged with a third-party payroll provider to some extent. Some allowed their payroll providers to handle everything while others opted for a shared responsibility model.
Employers rely on their payroll providers to understand tax compliance issues. They expect their providers to be on the cutting edge of changes in the law. Most importantly, they rely on their providers to make sure payroll remains in compliance.
For providers like BenefitMall, compliance with payroll taxes is just the beginning. There are other things to consider, from correct employee classification to complying with the still existing ACA regulations. There is a lot to know and pay attention to.
No doubt some people benefited from the recent IRS webinar. But with so much information on the table, the IRS really needs to do more.