Representatives from the Internal Revenue Service, US Office of Child Support Enforcement, US Citizenship and Immigration Services, and Social Security Administration met May 11 to answer payroll questions and provide advice on payroll scenarios. current payroll.
Declaration of Virtual Currency on Form W-2
Employers who pay their employees in virtual currency must report those wages on Form W-2 as the fair market value of the currency in U.S. dollars, said Susan Morris, policy analyst for the IRS. Fair market value is the amount the virtual currency is worth on the day the employee receives payment.
Independent contractors who receive virtual currency for their services should also report the fair market value to the IRS, she added. However, independent contractors use Form 1099-NEC instead of Form W-2.
All virtual currency payments are subject to the same federal employment taxes as any other form of pay, including unemployment tax, income tax and FICA tax, Morris said at the 40th Congress of the payroll from the American Payroll Association.
“This treatment is consistent with federal law, which provides that the method of payment for compensation services is immaterial in determining whether the compensation constitutes wages for employment tax purposes,” she said. .
Withholding tax order errors
Withholding orders sometimes contain an incorrect entity name if the employee works for a subsidiary of a parent company or if the subsidiaries of a parent company all have separate federal tax ID numbers, said Sherri Grigsby, OCSE Employer Services Team Leader. In either case, employers must implement the IWO to prevent the employee from accumulating child support arrears.
Employers can contact the national child support agency for an updated order, but they should also review their employment records, she said.
“Child support agencies get information about this person most likely from information provided through new hires or quarterly salary reports,” Grigsby said. “You may want to review the information you submit as part of the New Hire or Quarterly Salary reporting processes to ensure that the FEIN and name are associated with that individual.”
Employers sometimes use one FEIN when reporting new hires, but another when reporting quarterly wages, she added. Employers should be consistent in their use of FEINs. Otherwise, state child support agencies may believe these employers are violating new-hire reporting laws, even though the employer has correctly reported all of their new hires.
Storing the Form I-9 in an employee’s home
Some employers don’t have a physical workplace and must store Form I-9 records in an employee’s home, said Alice Jacobsohn, director of government relations for the APA. Employees with I-9 forms at home sometimes worry that a federal agent might enter their home to examine the forms.
Federal agents can make arrangements with employers to inspect Form I-9s at a separate location, said USCIS representative Susana Gonzalez. Inspection locations can be onsite, offsite, or even at a storage facility.
Employers must ensure that I-9 forms are stored securely regardless of their location, Gonzalez added.
“The employer must ensure that I-9 forms are stored securely because the I-9 form collects personal information from the employee,” she said. “The employer must also ensure that the Form I-9 is also available for inspection.”
Verification of employee name and SSN
When verifying employees’ Social Security numbers, employers may receive a notice that some Social Security numbers do not match names registered with SSA, said Darion Waters, director of the training and support for agency programs.
“If you discover that an employee’s SSN is incorrect, you should ask to see the Social Security card to make sure the name and SSN match what’s on your payroll records,” he said. he declares.
If the Social Security card contains the same name and SSN that the employer has on their payroll records, employees should be directed to contact the SSA to resolve the issue, he said. If the employer’s payroll records do not reflect the correct SSN and a Form W-2 containing the error was filed, a Form W-2c must be filed.