There are more than 6,500 federal, state and local government agencies, each with its own set of tax rules and regulations.
How much time does your company spend trying to sort through it all to make sure you are in compliance? Theres now a way to report your payroll taxes using the Internet.
This can be used by any size employer, says Fran Bartlett, president and CEO of Federal Liaison Services Inc., the software developer that makes this possible. There are various templates for different size businesses. You pay only for the services you use.
There is a monthly charge of between $75 and $150 month, a per-user charge and a charge based on the amount of activity. The only requirement is a computer with an Internet connection and a Web browser.
Fees include the tax returns. The initial setup requires you to fill out and sign forms required by the IRS before you can start using the service. FLS can handle federal, state, local and school district taxes for most areas, and has been doing it for 10 years.
Eventually, a large number of businesses will be required to file all their returns electronically. Right now, its available on a volunteer basis, but that will change. Next year, 6 million businesses will be required to file electronically; the following year, 20 million.
I encourage any business to work on the problem now while its on a volunteer basis, says Bartlett. Get automated now, and dont wait and be part of the masses when it becomes mandated.
The U.S. Department of the Treasury has proven how easy it is to use Web-based software for payroll tax compliance for its own payroll taxes. Treasury had been saddled with an inadequate, hard to use system that wasnt Y2K compliant, and initially considered a client/server model for its new system.
The department chose a Web-based solution instead, to take full advantage of the speed and accessibility of the Web. The system now handles about $40 billion of the Treasurys $1.5 trillion in annual collections.
More than 300 federal agencies under the Department of Treasury make their own payroll tax payments electronically using the Internet. All access the same database in real time from anywhere. The IRS will soon ask employers to use similar automation for their own tax reporting requirements.
Keep in mind that:
- Tax returns rank as the riskiest reports that businesses file.
- Federal payroll taxes are the largest and riskiest recurring vendor payment for most companies.
- Mandatory electronic tax filing for businesses of more than 50 employees is a real possibility within a few years.
- New regulations covering paycheck garnishments and liens for spousal and child support can put employers at risk for both payments and penalties.
Todd Shryock (email@example.com) is SBNs special reports editor.