Now that the presidential election is in the rearview mirror after months of exhaustive politicking and campaigning, politicians and citizens alike are turning their sights toward the end of the year, when a number of tax cuts, federal spending reductions and other provisions are set to expire as part of a phenomenon known as the "fiscal cliff."U.S. payroll tax legislation
that reduced the payroll tax by 2 percent (from 6.2 percent to 4.2 percent) is one such allowance that is practically guaranteed to expire at the end of the 2012 calendar year. However, its fate was virtually already decided weeks before it came time to count the ballots, according to Paul Dillon, director of tax services at Baker Tilly Virchow Krause, in a recent interview with Accounting Today
"Even before knowing the election results, there didn't seem to be any support on either side of the aisle for extending the payroll tax cut," Dillon told the news source. "We know that's going to expire at the end of the year."
The question of whether Congress and the Obama administration will extend the U.S. payroll legislation
to further the payroll holiday appears to have been largely answered. That said, officials are expected to be mired in a plethora of other tax quandaries over the remaining weeks of 2012.
"With the payroll tax cuts, there was a two-month extension so [Congress]] could take it up in full once they got back in January," noted Dillon. "I think you will see something like that either tied to a March deadline or when we're expected to reach the borrowing limits."How payroll software can help
Employers that have comprehensive payroll technology
in place can more easily brace themselves for the upcoming U.S. payroll compliance
changes. These types of software solutions automate much of the payroll process, taking the onus off busy company owners and HR staff by reducing the need for them to be involved. Generally, increased automation leads to a decline in payroll tax mistakes related to human error, streamlining the entire process for companies and employees alike.
Solutions such as the Sage BusinessWorks Payroll module allow companies to quickly and precisely carry out in-house payroll tasks, with the help of a comprehensive employee information database that facilitates the compilation of paychecks, W-2s and government reports at both the federal and state level.