While the announcement of a 2 percent payroll
tax reduction is good news for those taking home paychecks, it may also serve as an end-of-year headache for those who work on payroll. Therefore, the IRS this week released new guidelines to streamline payroll processing.
The instructions, named Notice 136, will feature updated withholding tables that will instruct companies on how to properly calculate income and Social Security taxes that require withholding from employee pay, the Salt Lake Tribune reports.
Under the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act, Social Security taxes fall from 6.2 percent to 4.2 percent, leaving many companies scrambling for new math at the busiest time of the year for tax filing.
"The IRS recognizes the late enactment of these changes makes it difficult for many employers to quickly update their withholding systems," IRS spokesman Bill Brunson said in a statement.
The IRS appreciates that the changes come at a difficult time for businesses, but recommends filings be completed as soon as possible. It asks that businesses have payroll tax updates completed by January 31 and social security tax withholdings updated by March 31.
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