Charles Read, CPA, USTCP, IRSAC
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Tax compliance, hands down is the most difficult part of payroll. There are Federal, state, and local taxing authorities. The laws, regulations, forms case law, filing requirements, procedures and everything else change all the time. Just look at the Tax Compliance Calendar from the American Payroll Association with well over 120 entries per year.
I have been involved with payroll for forty years and have owned a payroll services company for almost 30 years, so you could say I know a thing or two about payroll and compliance. As a payroll professional, I have to keep up with the changes. I listen to webinars and go to seminars, read the trade publications, take continuing education, talk to other professionals, and know-how to research everything payroll related.
There are several required certifications such as CPP (Certified Payroll Professional) or FPC (Fundamental Payroll Certification) or CPA (Certified Public Accountant). The Payroll Source which is an authoritative book to study payroll taxes for those certification runs over 100 pages and costs almost six hundred dollars.
Once you know “everything” you have to apply it in an ever-changing environment. Every time Congress meets they pass bills that change tax laws. Then there are fifty states passing laws on withholding, unemployment, reporting, depositing and more. Many times you are dealing with people in positions of authority in the tax agencies that know less than you do.
Then, of course, the taxing agencies make mistakes all the time. In 2018 the IRS alone, according to the Internal Revenue Service Data Book table 17, issued 4.9 million employment tax penalties for 4.8 billion dollars. 2.7 billion dollars got abated (reversed) by people who knew what they were doing.
Tax compliance is almost impossible if you don’t do it for a living. It is complex and contentious. The IRS and other agencies hold the cards and write the rules. If you don’t know the game better than they do, tough luck. It sounds a bit harsh, I know. But, it’s the reality, and the IRS looks closely at small business as easy targets to penalize. Do yourself a favor and hire a credible payroll services provider (like us!) and let them handle it. You’ll be glad you did.