IRS UPDATE: Payroll Tax Rate Change

Dear Business Organization:

As you know, Congress passed and the President has signed into law some tax law changes earlier this week. The payroll tax rates were not affected by this week’s legislation, which means the temporary two-percentage-point payroll tax cut in effect for 2011 and 2012 has now expired.

I wanted to be sure and get the information below to you as soon as possible.

Below is the news release which was posted today to IRS.gov. Within the release is a link to Notice 1036, which contains the percentage method income tax withholding tables, the new Social Security withholding rate, and related information that most employers need to implement these changes. IRS is asking employers to adjust their payroll systems as soon as possible, but not later than Feb. 15, 2013.

Please make sure your members are aware of the new law and the Notice1036, which contains the information employers will need to implement the new rates.

Please continue to monitor www.IRS.gov for the latest updates. As new information becomes available, I will also send it to you directly.

 

Kari
Kari Gilje
Senior Stakeholder Liaison
IRS Communications & Stakeholder Outreach
Ph 206.220.5469
kari.s.gilje@irs.gov

IRS Provides Updated Withholding Guidance for 2013

http://www.irs.gov/uac/Newsroom/IRS-Provides-Updated-Withholding-Guidance-for-2013

The Internal Revenue Service today released updated income-tax withholding tables for 2013 reflecting this week’s changes by Congress. 

The updated tables, issued today after President Obama signed the changes into law, show the new rates in effect for 2013 and supersede the tables issued on December 31, 2012. The newly revised version of Notice1036 contains the percentage method income-tax withholding tables and related information that employers need to implement these changes.

In addition, employers should also begin withholding Social Security tax at the rate of 6.2 percent of wages paid following the expiration of the temporary two-percentage-point payroll tax cut in effect for 2011 and 2012. The payroll tax rates were not affected by this week’s legislation.

Employers should start using the revised withholding tables and correct the amount of Social Security tax withheld as soon as possible in 2013, but not later than Feb. 15, 2013. For any Social Security tax under-withheld before that date, employers should make the appropriate adjustment in workers’ pay as soon as possible, but not later than March 31, 2013.

IRS Statement on Jan. 1 Tax Legislation Passed by Congress

http://www.irs.gov/uac/Newsroom/IRS-statement-on-tax-legislation-recently-passed-by-Congress

The IRS is currently reviewing the details of this week's tax legislation and assessing what impact it will have on this year's filing season. The IRS will soon make available additional information on when taxpayers can start filing 2012 tax returns.  On Jan. 3, 2013, the IRS issued IR-2013-1 providing updated withholding guidance.

Year End Information

Here are some Year End things that you need to be preparing for by December 31, 2012:

Ø Inventory Count:

• o If you carry inventory for Resale you MUST do an Inventory Count at least once a year and if you have not done one already please make sure that you do this by the end of the year

Ø W-9-s

• If you have not already sent me the W-9’s for your Landlord, Sub-Contractor(s)/Independent Contractor(s), Attorney, Professional Services etc please send this information to me ASAP as we are getting ready to work on the 1099’s very soon. We will start to issue the 1099’s in January and once we prepare them and if you have changes we will be charging a $25 per 1099 fee so please get this to us ASAP and avoid the extra fee.
• I would highly recommend that you obtain W-9’s from the appropriate people BEFORE you pay them in the future and make sure that review the information on the W-9’s for accuracy and if you are not sure please call our office and we can walk you through this.

Ø Rate Sheets for 2013

• If you have payroll you should have received, or will be shortly receiving, the 2013 Rate Notices from L&I and Employment Security, once you receive them you need to send them to ADP, Paychex or whomever does your Payroll. Please do NOT send them to us as we are not doing the payroll and we are going to be forwarding them to your Payroll Company anyways. Our busy time has started and we want to make sure that your Rate Sheets get to the right place in a timely fashion.

Ø Ask Client questions:

• If you have any “Ask Client” questions that need to be completed, please do so ASAP so that we can prepare Year-End reports in a timely fashion and then start working on your Tax Return(s) so that you do not have to wait. A little planning now will save a lot of headaches come February through April.

Ø Sales Information:

• Please get us your Monthly Sales information for November ASAP and December’s Sales information to us by NO LATER than January 10^th, 2013 please.

Ø Outstanding Issues:

• If there are any outstanding issues besides the above please try to get them resolved with us at your earliest convenience so that they do not become bigger issues come Tax Time.

I wanted to thank each and everyone one of you for another fantastic record year we have had. We wish all of you Happy Holidays and an even Happier and more prosperous New Year from all of us here at NW Accountants, Rizwan, Emily, Adriana and Erv.

As always if you have any questions or concerns please feel free to contact us.

Best Regards,

Rizwan Chaudhry

19009 33rd Ave W Suite 203 Lynnwood, WA 98036
Phone:425-778-2665 | Fax: 425-678-0059
Email: rizwan@nwaccountants.com | http://www.nwaccountants.com