U.S. payroll tax legislation that provides workers with a 2 percent payroll tax cut intended to put more money in their pockets and stimulate the economy may or may not be allowed to expire at the end of the year, as part of the so-called fiscal cliff. All signs have been pointing to an expiration, but the White House recently indicated that an extension—albeit for a smaller rate decrease—may be in the cards. The uncertain future of the U.S. payroll legislation means many aspects are up in the air as 2012 draws to a close, but there are some year-end payroll tax tips that are perennially useful when it comes to maintaining U.S. payroll compliance, regardless of whether or not a payroll tax holiday is currently in effect.

Proactive year-end payroll management
ADP's Small Business Services division recently released recommendations to help streamline end-of-year payroll processes for small enterprises and the accountants who oversee them.

"Small business owners are responsible for every aspect of their business, including hiring and managing employees, servicing their clients and adhering to complex tax regulations," noted Anish Rajparia, president of ADP's Small Business Services Division, in a recent statement. "That's why, as we approach year end, it is especially helpful for small business owners, together with their advisors, to proactively take steps that help reduce risks to their business."

ADP's suggestions include:

- Submitting payroll adjustments ahead of final 2012 reports (with a deadline of December 28)
- Reporting missing wages, miscellaneous income and tax credits, such as fringe benefits, employee moving expenses, unsubstantiated employee expense reimbursements, COBRA payments and tips (with a deadline of December 28)
- Understanding filing responsibilities and requirements
- Reviewing and confirming W-2 and 1099 information with employees
- Verifying that all tax ID numbers on payroll reports are up-to-date and correct ahead of final 2012 reports

Payroll services provider Business ASAP offered its own list of the top five items that business owners should recap, review and check for accuracy before processing their last payroll reports of 2012:

- Employees' personal information, such as addresses and Social Security numbers
- Fringe benefit compensation
- Benefits data
- 1099 contractor payments and W-9 information
- Additional payroll runs, including bonus runs and owner/adjustment payrolls