Coronavirus Update

As I posted in my last blog, many states as well as the federal government are making temporary changes to tax filing deadlines, unemployment insurance requirements and other matters during this pandemic.  The following is a recap of the latest updates that have crossed my desk this week:

Note:  I will be offering a webinar on the payroll related items occurring during this pandemic.  See info at bottom of blog for more details.

Federal: the U.S. Treasury Department, Internal Revenue Service (IRS), and the U.S. Department of Labor (Labor) announced that small and midsize employers can begin taking advantage of two new refundable payroll tax credits, designed to immediately and fully reimburse them, dollar-for-dollar, for the cost of providing Coronavirus-related leave to their employees. This relief to employees and small and midsize businesses is provided under the Families First Coronavirus Response Act (Act), signed by President Trump on March 18, 2020. For full details see IRS website’s Coronavirus webpage.

The following states are providing filing or deposit penalty relief or extending deadlines due to the Corona Virus:

 

Unemployment Insurance Update: The following states are waiving waiting times or making other temporary changes:

The following is provided by these states:

San Francisco, California: Workers and Families First Program will provide paid sick leave to impacted workers.

New York: Guaranteed sick leave for New Yorkers under mandatory or precautionary quarantine

I will be offering a webinar/lecture on major impacts that affect payroll professionals due to the pandemic.  It will be held on Friday, April 10, 2020 from 10 am to 11:30 am Pacific time.  More details will be available next week.

Corona Virus Update

The federal and state governments are focusing on providing either tax relief, lost wages relief or updates when employers are affected by the Corona Virus.  This may include delaying reporting or allowing for penalty relief.  It may also include mandatory sick pay, clarification on current sick pay mandates or changes to unemployment insurance qualifications. The following are some of the actions being taken by the IRS or states during this difficult time:

Internal Revenue Service: The IRS has established a special section focused on steps to help taxpayers, businesses and others affected by the coronavirus. This page will be updated as new information is available. This page includes information on (1) Deferring tax payments and (2) High deductible plans covering the pandemic.

So far, the following states are addressing the pandemic:

States Extending Filing Deadlines:

  • California: 60-day filing extension available
  • Maryland: Extend to June 1

State Unemployment and/or Disability:

The following states have suspended the waiting period for unemployment benefits for any employees affected by the Corona Virus: California, Illinois, Iowa, Kansas, Maine, Massachusetts, Michigan, Minnesota, New York, North Carolina, Rhode Island, Tennessee, Texas, Vermont, and Washington.

Paid Sick Leave Updates or Guidance:

San Francisco: The San Francisco Office of Labor Standards Enforcement (OLSE) has issued guidance regarding the use of San Francisco paid sick leave for situations involving the recent Coronavirus outbreak.

Colorado: Effective March 11, 2020, emergency rules temporarily require employers in certain industries to provide a small amount of paid sick leave (up to four days) to employees with flu-like symptoms while awaiting coronavirus (COVID-19) testing. The DLSS has a webpage dedicated to the emergency rules with further information that will be updated as necessary.

New Jersey: Workers may use sick leave, apply for TDI or apply for Family Leave Insurance due to the Corona Virus.

Washington: Workers who are sick with the virus and have a Certification of a Serious Health Condition form signed by a healthcare provider may be eligible for Paid Family and Medical Leave benefits. The ESD has a comparison guide and a list of frequently asked questions (FAQs) to find out which programs and benefits are available in various circumstances.

As more information comes in for the states, I will update this blog.

The Most Common Mistakes People Make With Payroll and How to Avoid Them on a Global Scale

I have a guest blogger today who is addressing general issues for a global payroll.  I thought you would find it very informative. It is submitted by Lingappa Amiyappa, General Manager–Payroll Operations, Paybooks Technologies India Pvt. Ltd. Their website is www.paybooks.in. 

Every business which has employees must have a process in place to handle payroll, deductions, paying taxes to the state and central government, on time. The payroll process must work like a well-oiled engine – it is one of the most under-appreciated aspects of running a business but the most important. Not to mention that when mistakes happen, then the impact on a business can be bad.

The good thing is that most of the common errors which crop up during processing can be avoided by planning well, getting the right tools, and hiring the right people for the job. Training on an ongoing basis will also help payroll specialists keep up with the changes in the tax structure, learn how to catch mistakes early, avoid or fix them as needed.

That said, here is a look at some of the common payroll mistakes and how to avoid them.

  1. Incomplete records: This is one of the major reasons for mistakes in payroll. Though the requirements vary from country to country, employers are required to maintain employee records for multiple years. These should include hours worked, rate of payment, date of disbursement, etc. Having incomplete and less information like misspelt names, wrong ID numbers, etc. can result in penalties as it takes many man-hours to fix these problems.
  2. Incorrect employee classification: With more temporary employees, contractors, and consultants becoming part of the workforce, it is essential for a company to keep proper records. Proper classification makes it easier to send out paychecks as well as determine tax reporting.
  3. Missed deadlines: Since payroll activity is carried out regularly, it is essential that the payroll team marks the calendar for reporting deposits and paying payroll taxes to the central and state governments on time.
  4. Tax-related forms not sent: All employees, especially contractors must receive Form 16s every quarter so that they can file their tax returns. In the process of trying to do payroll and send out information, payroll teams have missed sending these forms out.
  5. Wrong calculations on overtime payments: Companies have guidelines in place on determining overtime pay. If it is not calculated properly, then it can cause problems and unhappy employees. This can happen if the employee classification is wrong. In some cases, the employees don’t get the overtime payment they are entitled to.
  6. Overdependence on software: There are excellent software products which are used to do payroll activities. As always, results depend on the person putting in the information. In the process of trying to do things quickly, some information gets left out and subsequent calculations are incorrect. The software can prompt the user for information, but this may not always be the case.
  7. Unsaved payroll records: Even though requirements vary from state to state, every company should save payroll records for a minimum of 5 to 6 years.
  8. Lack of confidentiality: Payroll teams should not share private and sensitive information with other employees as this can cause disagreements. Only senior managers and people in the payroll department can have access to this information.
  9. Inadequate personnel: Payroll teams should have enough people to carry out related tasks. When there is just one person to do the job and he/she falls sick, the work comes to a stop and causes delays. Not just that, it is always sensible to have back-up systems which can be used in case of computer failure.

 Tips on avoiding errors while doing payroll

 There are many things a payroll processor can do to avoid the errors listed above. Including the following tips into the payroll process will help you note and avoid errors before they creep in. A little care and attention go a long way in making the process fast, accurate and easy.

  • Getting the right tools – Don’t want payroll mistakes disrupting your company and employees? Do some research and find the right payroll and HRIS packages. These must be integrated so that the HRIS manages vital employee information like ID numbers, bank account numbers, wages, hours worked, deductions etc. and these can be used by the payroll system every month to pay wages/salaries. Payroll systems, when synced with the HRIS, will automate tedious tasks. Payroll software does critical tasks such as file taxes, distribute paychecks, automate leaves, etc.
  • Stay current on information – Many payroll errors occur because payroll processors don’t have enough or the most updated information. As laws and tax codes change frequently, it is important for them to stay updated. This is even more important if the organization has a global presence. Requiring payroll admins to do regular checks on employee status and other information can reduce error rate drastically.
  • Analyzing Reports – Payroll software have a reports feature and generating one before sending out paychecks can cut down on mistakes. Getting the following reports will reduce error rate – deductions, payroll register and company’s cash requirements.

If payroll with errors has already been processed, fix it by reporting the error to the tax authorities. Your company may have to pay penalties, but it could get worse if the problem is not fixed. In case of minor errors, you could do one or all of the following:

  • Cancel the current payroll and reissue once updates are done
  • Run payroll manually in addition and adjust only for those employees whose payroll has errors
  • Ensure that corrections have been made so that they don’t occur in the next payroll cycle

Summary

Once payroll errors have been noticed, figuring out where they are and fixing them will ensure a smooth process every pay period. Processing payroll is not the easiest job considering the number of things that must be correct. Incorrect or late payroll can have a big effect on employee morale, so it is important to do it right every time.