Record Payroll Tax
Hosts & Guests
Record Payroll Tax with Alex Korzhen and Stacey Roberts
Meredith Smith [00:00:02] Welcome to SALTovation. This SALTovation show is a podcast series featuring the leading voices in SALT, where we talk about the issues and strategies to help you make sense of state and local tax for everybody in states.
Stacey Roberts Hi everybody, it’s Stacey and Alex from SALTovation, we're here today to talk to you about some best practices around state and local payroll taxes, so that includes what's holding up. Yeah, well, I'm sure everybody's favorite topic. This is a riveting topic for everybody, but around withholding unemployment and, you know, special types of taxes to certain states have all things payroll. Honestly, like I said, some of the best practices that we've tried to put into place based upon some experiences that we've had good and bad. So with that, I guess talk to me a little bit about some of the experiences you've had with payroll providers and transitioning and things like that.
Alex Korzhen [00:01:03] Thanks. Well, so my mother said, if you don't have anything nice to say and so we're not, you know, we're not trying to, you know, disparage anybody here, obviously. I think it's been somewhat. And I'm not naming any names. It's been what we are, what we're seeing recently with such a big picture, right? We, you know, with the pandemic and this 2020 2021, we had, we saw the workforce move, right? So now we're not focused on working from the office anymore. Now we still have a lot of people working from home. So the home becomes the office for me. If you kind of ignore the special carve out that states had for, you know, during the COVID emergency, now we're kind of seeing the states revert back to regular withholding rules and source sourcing rules. So if the employees are still working from home and this is all general, their home becomes their work location. So what we're seeing is obviously a lot more employees now. Working from home and we have to reevaluate our payroll map, so to speak. And a lot of you know and then new hires the workforce is, you know, they're now coming into the office anymore. We're also seeing this in the guise of companies, our clients switching away from pose and starting to manage their own employer accounts and player payroll accounts. So there are several reasons why. Why these issues have come up and, you know, and overall, it's been frustrating for our clients because I don't think they realize that neither are those kinds of scenarios, how rigid these payroll companies are. They're not getting the support that they I guess expected, especially in the peo example. And I know you're dealing with a client kind of in this situation as well. Right now, the PEO-, for whatever reason, these companies are switching away from them did provide a certain amount of. Guidance and consulting. Right. Some advice that was given as part of their services and when switching to the two, just the provider, you know, processing that disappears. And I think our clients were kind of left a little bit out in the cold with their questions on how to handle those transitions. Is that kind of fair of what you saw?
Stacey Roberts [00:03:28] Yeah, no. I would say that's very fair. And I don't think that taxpayers fully understand or appreciate the level of service that they are signing up for, you know, a payroll processor. That is what they are. Now, mind you, they may handle some other accounts, you know, whether it's four one KS, et cetera. But you know what you and I deal with on a daily basis, but for these taxpayers is related to the payroll taxes. So the remittances of the withholding and the employment and I think, you know, just even in the, you know, some of our clients that have switched, they don't even fully appreciate the fact that the payroll processor is not getting the registrations for them. So what happens is that under a normal CEO situation now, this isn't true in every state, but a lot of states say, OK, happy go. We're the employer of record. And then they submit all of the returns, all of the payments on the company's behalf under their information. Well, not every state looks at it that way. Some states don't actually recognize pose. However, those that do, then when you bring that in house or move to a payroll processor, the companies left to get their own account numbers. Well, that takes a lot of time. And in the registrations themselves, they are what they are. But there's a lot of information that is required similar to, you know, like a sales tax registration. You know, there's owner information that is required. There's, you know, corporate officer information that's required, et cetera, because, you know, they need that legal liability piece covered just the information needed to do. The registrations alone are a lot. But then the time is assuming also. Yes. So the time that it takes for a state to even process the registrations and then give the numbers is a little bit of a it could be a game, honestly, because I know that for one of our clients, they changed from a P.O. to in house to a payroll processor mid-month mid-quarter. Mm-Hmm. And so they weren't set up in a lot of the states, and so they were linked to the pandemic and late to make payments, et cetera.
Alex Korzhen [00:05:44] God bless those states that will give you an account number right away, right? Yes. Yes. You know, they will. You know, you hit submit and within five minutes in your inbox, you have an email that says, you know, you've been assigned such and such account number. This is your, you know, your rate for EUA purposes. I mean, thank you. Those states, really because the converse of that is, hey, we will send you a welcome packet with your account number and rate information, you know, within three to four weeks in the mail and snail mail. And like, come on, it's 20 21. Very maddening and nobody's in the office. You know, a lot of employers kind of have some people now, but you know, I remember doing this, you know, early 20, 21, late 2020. Nobody's in the office. There's nobody to get the mail. It just sits there and, you know, and in the mailroom and you know, just good luck getting that information. Otherwise, it's just really , it's quite frustrating and said, you know, I'm going to stop my rant now, but I feel the same way about this as I do about fax machines.
Stacey Roberts [00:06:51] So, yeah, so I think long story short there is that if you know a taxpayer is signing up with a payroll processor, just keep in mind that that's their job. Not really outside of that responsibility. They're not typically going to get the registrations. They're not typically going to do back filings. Even so, let's say in the, you know, an example I just gave, you know, it took a while to get some of these account numbers and the processor was hands off. They were not going to do any prior filings. It was only on a go forward basis. So these are just some things I think taxpayers have to keep in mind and just be aware of if they are looking to either hire a new jurisdiction or be, you know, hire a new payroll processor, quite frankly, right? Move away from a P.O., et cetera. Right.
Alex Korzhen [00:07:48] And something else that I'm kind of saying is since we're on the topic of, you know, a mobile workforce in a remote workforce is the internal mapping of these employees. I have a client. We did a payroll like an internal audit. Not. Not an external audit, just an audit of the mapping of where these people live and work and what we saw was a lot of employees were still mapped to a home office and withholding was based off of that. Well, that's not usually the case anymore. So we, you know, it's a good idea to go back and just revisit employee mapping to make sure that the employees work location, which is for these remote folks, will generally be their home state and is updated and withholding is based on that location again, just generally. But a review of that data is probably a good idea these days.
Stacey Roberts [00:08:45] Right. And the coordinate departments? Right. So I think, you know, we see where recruiting is going out and doing their thing, and they're super excited about getting somebody hired and onboarding, et cetera. But that H.R. might not be fully aware of where they are. Maybe they're just getting mapped to an office as opposed to understanding where that person physically sits. That's right. It's just more of a coordination effort among departments. Yeah, that's a great point. You know, the office where somebody is supervised out of or is kind of or old, I guess.
Alex Korzhen [00:09:22] Yeah, yeah. Is not necessarily is not the same as their work location pre-pandemic. I think that would have been generally those two generally would have lined up. But nowadays that's not true anymore, you know?
Stacey Roberts [00:09:36] Yeah, absolutely true. And we've got people moving around, right? So they've got a little bit of a hybrid workforce going on right where it's maybe they're going to the office for part of the time and they're at home part of the time so it can create some complexities around this.
Alex Korzhen[00:09:53] Yeah. Anyway, so takeaways review your employee mapping and we're certainly not advocating for those. But, you know, but they they do a lot
Stacey Roberts [00:10:04] so be careful with your payroll processors. Just be aware of the level of service that you signed up for. So if you have any questions, reach out to Alex and automation. Thanks, everybody. Thanks.
Meredith Smith This podcast is for educational purposes only and is not intended, nor should it be relied upon as legal, tax, accounting or investment advice. You should consult with a competent professional to discuss specifics of your situation and the applicability of the information presented.
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What You Will Discover:
- [00:52] The effects of a remote workforce
- [02:20] Things to keep in mind with PEOs
- [07:48] Reviewing employee mapping
- [09:53] Some takeaways
- “So what we’re seeing is obviously a lot more employees are now working from home and we have to reevaluate our payroll map, so to speak.” -Alexander Korzhen [02:01]
- “I think long story short there, if a taxpayer is signing up with a payroll processor, just keep in mind that that’s their job.” -Stacey Roberts [06:54]