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Employment tax advisory services Resources you need when you need them
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1Employment tax advisory services Resources you need when you need them |
EY’s employment tax advisory servicesWages and related employment tax expenses represent one of the top five corporate expenditures, and because of the current economic climate, employment tax liabilities will continue to increase over the next several years. In addition, to meet budgetary objectives, many companies have placed greater reliance on third-party providers to either manage the entire payroll function and/or control the tax processing. While corporations allocate a significant budget to manage their income tax compliance (corporate tax — even under net operating loss scenarios), organizations often cut the budgets and look to streamline their resources surrounding employment tax management. The result is a transformed payroll department that is challenged to keep pace with the rapidly changing landscape of employment tax compliance and ever-increasing audits and scrutiny.
EY’s employment tax professionals work every day with businesses to address and manage many of the new tax issues they face. During the past year, we have seen many companies enhance their internal governance surrounding employee compensation and employment tax compliance. Organizations are reviewing their current processes, third-party vendor relationships, current slate of federal and state audits, and internal practice and procedures in an effort to address compliance. We help our clients uncover the specific employment tax areas that require attention in order to enhance compliance.
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Overview of servicesThe current landscape• The national unemployment rate hovers
around 7%.
• The American Recovery and Reinvestment Act of 2009 and other legislation have served to expand the number of eligible unemployment claimants and increase average unemployment claim payments.
• Many state unemployment insurance trust funds are insolvent.
• States are experiencing budget shortfalls
• Federal, state and local audit examinations are on the rise and becoming more rigorous.
• State amnesty programs are frequently available to encourage voluntary disclosure.
No employer is immune to rising costs• Current economic conditions will produce a
long-term increase to employer above-the-line costs.
• During this time frame, most employers, whether or not they have engaged in workforce reductions, will likely see increases in their state unemployment insurance tax.
• Many companies have not accounted for this approaching spike in costs in their internal budgets and forecasts.
• Increased examinations and specific-purpose audits are expected to continue.
• Increased creative means of enforcement and correction (communication between state departments or IRS) are expected to continue.
Call to action• Revise budgets and forecasts relative
to pending increases in unemployment tax cost
• Evaluate administrative, structural and strategic options to proactively manage these pending increases
• Enhance and deploy a more comprehensive unemployment insurance claims management program
EY’s Employment Tax Advisory Services group helps companies evaluate their payroll and employment tax operations and practices, identifies employment tax cost savings opportunities aligned with the company’s systems and processes, and helps companies implement change to match the client’s long- and short-term objectives.
3Employment tax advisory services Resources you need when you need them |
When do businesses need help?As employment tax costs continue to rise, businesses are challenged to seek efficient management strategies. Whether the payroll and employment tax functions are handled internally or outsourced to a third party, there are any number of situations that require assistance from an experienced payroll and employment tax professional. For example, when a business is acquired or closed, a number of important federal and state requirements must be met, and there are options in the implementation that can increase or decrease cost and enhance or impair operational efficiencies. A change in payroll and employment tax management or the HR/payroll system platform may create a temporary but urgent need for resolution.
Our experienced professionals can help businesses meet sensitive deadlines and collaborate to develop processes and policies that achieve compliance and cost-containment goals.
EY — services as diverse as the needsOur team offers a coordinated group of distinct services, each designed to provide a robust strategy for meeting the needs of payroll and employment tax departments. Services include:
• General advisory
• Employment tax analysis
• Mergers and acquisitions (M&A)
• Employment tax risk management
• Payroll process review
• Unemployment claims administration services
• Information services and publications
• Employment tax outsourcing
General advisoryAuthoritative written advice can be obtained from EY’s Payroll and Employment Tax professionals through personal consultation and/or by accessing EY Online, a web-based response network that is available to users 24 hours a day, seven days a week.
Employment tax analysisFor in-depth analysis that goes beyond the scope of general advisory services, our Employment Tax professionals are available to perform more in-depth analyses of local, state and federal employment tax, including multi-jurisdictional requirements when employees cross state or US borders.
M&AA wide range of employment tax experience is necessary in the planning, implementation and post-implementation phases of a merger or acquisition. Our Employment Tax professionals can assist in pre-acquisition/merger due diligence, new business registration and account closing for state income and unemployment tax, and post-implementation review, including refund studies.
Employment tax risk managementOur professionals assist businesses with employment tax issues that unexpectedly arise. Employment tax risk management services include:
• Compliance and audit exposure assessment
• Refund studies or claims filings
• Return preparation
• Assistance in mediation for penalty abatement and voluntary disclosure or settlement agreements
• Assistance in employment tax audit coordination
• Electronic data processing file preparation
Payroll process reviewFor businesses requiring a full-scale payroll and employment tax process and procedure evaluation or internal or external audit support, EY offers payroll process review services. These services help identify issues arising from control weaknesses, system configuration errors, process and system interface deficiencies, and compliance gaps. The payroll process review is supported by technology that analyzes banking transactions and pay data for anomalies that are indicative of errors or control weaknesses.
Unemployment claims administration servicesOur unemployment claims administration services help clients address a broad spectrum of issues associated with unemployment tax management. These services include:
• Unemployment claims review and response
• Appeals preparation and hearing assistance
• Benefit charge review
• Claims performance reports/reviews
• Educational modules
• Unemployment tax rate analysis
• M&A/refund studies
• Unemployment rate projections
• Claims and tax impact studies
• Internal rating allocation
• Unemployment insurance statutory elections
4 | Employment tax advisory services Resources you need when you need them
Employment tax advisory servicesEmployment tax audit risk managementThere has been a recent increase in employment tax audit and enforcement activity at the federal, state and local levels. This is due in part to improvements in technologies, successful initiatives that create interstate and cross-agency relationships, and a national focus on improving voluntary tax compliance. What was once an area of minimal focus for taxing authorities has become significantly relevant.
In 2010, the IRS launched the National Research Program announcing random audit activity of at least 6,000 business including “for profit” and “exempt” organizations. Specifically, as part of this program, the IRS announced its keen focus on the inclusion of compensation and fringe benefit reviews as well as the Questionable Employment Tax practice program that includes an agreement to share employment tax audit findings with more than two dozen states.
State taxing authorities have similarly increased employment tax enforcement activities using various automated systems to flag questionable transactions (e.g., employees transferring from one unemployment account to another). This gives the taxing authorities an opportunity to initiate information requests and subsequent audit assessments. In 2009 alone, the Connecticut Department of Revenue launched an electronic employment tax audit similar in breadth and scope to a highly successful and profitable New York employment tax audit program. Several states, including Ohio, Oregon and Maryland, formed interagency agreements to share information concerning misclassified workers and/or impose substantial fines on businesses for worker classification violations.
Measuring your employment tax audit riskA business is at risk of an employment tax audit and/or employment tax assessments if:
• Employees work outside of their resident states and/or countries and tax is not withheld in the non-resident jurisdictions.
• Employees work outside their home countries and in the US for temporary stays.
• Employees who work in the US on an inpatriate assignment are paid from their home countries’ payroll.
• Non-employee compensation is provided to foreign national individuals for services performed within the US (i.e., foreign nationals are treated as US independent contractors).
• Withholding tax is not collected in all jurisdictions in which employees live or work.
• Workers are paid through accounts payable, and a Form 1099 rather than a Form W-2 is issued (i.e., workers are treated as independent contractors rather than as employees).
• Workers were transferred from one legal entity to another (e.g., as a result of a merger, acquisition or restructuring) without evaluating state successorship law and filing requirements.
• Tax deposits are not timely made for imputed income (e.g., taxable stock transactions).
• Compensation is deferred over a period of more than one year (e.g., stock awards and deferred compensation) and is not allocated to the various states and localities where services were performed as required under state and local law.
• Legal settlement (e.g., back pay) awards are made to current or former employees.
• Policies and controls are not in place to address whether that employee business expense reimbursements are adequately and timely substantiated and have a business connection.
• Fringe benefits are not appropriately recorded as compensation.
• Important tax records such as federal, state and local withholding allowance certificates and supporting documentation have not been secured and/or retained according to jurisdictional record retention requirements.
• Tax notices, or other information requests, have already been issued by taxing authorities but were not addressed appropriately and/or timely.
• An employment tax audit is already scheduled or under way.
Why businesses are turning to EY for risk management servicesWhether a business is seeking an employment tax audit risk evaluation or assistance with a current employment tax audit, our professionals offer the skills and experience needed to provide assistance throughout the process. Our dedicated Employment Tax team works across EY tax service lines in order to provide a wide range of risk management services that include:
• Compliance and audit exposure assessment
• Adjustment return preparation
• Examination, appeals and hearings representation
• Mediation for penalty abatement and voluntary disclosure/settlement agreements
• Pre- and post-audit employee communication and individual tax consultation and return preparation
• Audit coordination
• Electronic data processing audit file preparation and consulting services
5Employment tax advisory services Resources you need when you need them |
Uncovering efficiencies through EY’s employment tax transformation servicesEconomic developmentsChanges in audit requirements arising from legislative reforms have placed a renewed emphasis on internal controls and fiduciary responsibility. This emphasis will be both internally and externally driven as audit committees and public accounting firms begin to comply with new stricter standards of review. Companies need to understand global employment tax issues due to globalization, offshoring and international assignments. Economic conditions are driving corporations to look for above-the-line cash flow opportunities. A detailed review of a corporation’s employment tax history and processes can result in significant cash refunds, credits and/or prospective favorable filing positions.
In consideration of this new environment in which corporations operate, EY is committed to helping businesses take a renewed look at their payroll and employment tax processes and systems to determine if they comply with internal control standards and if there is significant exposure to the corporation or its officers arising from compliance risks. At the same time, businesses may realize improvement in their financial position by employing strategies such as filing options and by implementing processes that give rise to cost savings.
What is a payroll process review?By reviewing a corporation’s payroll processes, with a specific focus on internal controls and general payroll as well as employment tax compliance risks and opportunities, EY professionals:
• Detect the potential for unknown liability/penalty exposures
• Identify potential tax savings and refund opportunities
• Discover potential gaps in the internal control structure and measure the overall effectiveness of various payroll and employment tax processes, including:
• Cash transactions and cash management
• Employee master file and pay/ deduction transactions
• Record-keeping, records management and management reporting
• Payroll interfaces (e.g., banking, third-party service providers, benefits, human resources)
• Third-party oversight
• Federal, state, local and provincial tax reporting
• Efficiency/accuracy safeguards
• Staffing and organizational interfaces
• The scope of the payroll process review is limited for EY Securities and Exchange Commission (SEC) registrant audit clients.
Typical reportAt the completion of a payroll process review, we provide a report summarizing our observations on your business risks and a recommended remediation plan. Depending on the scope of our review, the reports can cover:
• Payroll non-compliance issues
• Process efficiency
• Internal control effectiveness
Is your company a candidate for a payroll process review?Businesses most likely to benefit from a payroll process review:
• Have a known problem in the payroll and employment tax areas
• Have received employment tax penalty notices from federal, state/provincial and local taxing authorities or a notice of an unclaimed property audit/assessment
• Employ a mobile workforce crossing both state and country borders
• Employ individuals who live and work in different jurisdictions
• Provide benefits, other than qualified retirement, that accrue over a period of more than one tax year (e.g., stock plans)
• Have experienced a recent shift in payroll management, payroll processing systems and/or payroll service providers
• Recently underwent a merger, acquisition or restructuring that impacted on employment
• Recently increased or decreased employee count
• Have undergone past internal/external audits that did not give specialized focus to the payroll and employment tax areas
The right service at the right timeMany reforms in corporate governance have been instituted by the market. Where audit committees and business risk services were historically overlooked, they are filling much more substantial roles. Financial statements and business risks are being discussed openly among audit committees, management and auditors as never before. Additionally, economic pressure has increased the scope and number of federal, state/provincial and local employment tax and unclaimed property audits and has heightened corporate interest in seeking sources for above-the-line cash sources. The payroll process review is a timely business approach for dealing with the significant issues confronting businesses today.
Our approachEY performs a payroll process review using the following approach:
• Co-development of the scope of the review
• Questionnaire and data collection
• Documentation review
• On-site interviews and observations
• Data sampling
• Review assessment and reporting
6 | Employment tax advisory services Resources you need when you need them
States are becoming much more sophisticated and stringent in enforcing their current laws with respect to non-resident income tax withholding. For example, many states have used assertive approaches to get their share of personal income tax from highly paid professional athletes who work in their state. The significant tax dollars derived by the states from these efforts are now leading them to target highly paid corporate executives and other employees who travel and spend time in their state for any business reason.
The state of New York, for example, is currently using public information to target numerous Fortune 500 companies whose executives and other employees spend time in New York. The results of these efforts have created millions of dollars of potential exposure for companies and their affected employees (i.e., failure to withhold by the corporation and failure to file non-resident personal income tax returns by the individual). The potential exposure is particularly sensitive when a VP of Tax must inform executives and other employees that the company did not properly withhold, subjecting the company and its employees to unexpected tax, penalties and/or interest.
Accordingly, all businesses need to be concerned about their level of multistate non-resident withholding compliance, the impact on payroll processes and system limitations, and, if necessary, identifying what steps should be taken to achieve a compliance within their organizational structure, whether retroactively or prospectively. Some of the areas of focus by the states include executive fringe benefits, deferred compensation and telecommuting employees.
Multistate non-resident withholding tax compliance
Evaluation/ assessment
Voluntary disclosure preparation/
taxing authority representation
Execution of voluntary disclosure
agreement
Compliance policydesign,
communication,implementation and
support
Decision-making Negotiation Prior-year compliance
Prospective compliance
Identify states and employees likely to have material multistate activityIdentify records/sources that provide indicators of multistate activityCompile exposure estimates by statePrioritize compliance project based on exposureIdentify internal and external project team membersCreate project work plan with time linesObtain senior executive approval of work plan
Create workpapers providing details of employees, tax liability and assessmentsDraft no-name voluntary disclosure agreementSubmit draft voluntary disclosure agreement to senior management for approvalSubmit no-name voluntary disclosure agreement to state with summary data only from workpapersReview state voluntary disclosure offer and finalize
Determine gross-up policy for employee tax liabilityRecompute wages, taxes and interest based on gross-up policyPrepare corporate and individual returns and/or schedules based on terms of voluntary disclosure agreement and policy determinationsFile returns and associated payments with stateFollow up to make sure state has executed voluntary disclosure agreement according to negotiated terms
Determine technologies and processes used for multistate compliance (including multiphased approaches)Determine employee policies for equalization, tax return preparation, etc.Communicate policies to employeesImplement process and technology solutionsDetermine internal audit procedures for compliance monitoringDetermine and/or evaluate reserves, if necessary, for current/future exposures
EY’s integrated approachWe help clients achieve a multistate non-resident withholding approach utilizing the following steps.
EY’s National Employment Tax Services team has assisted numerous Fortune 500 companies with implementing various approaches for:
• Tracking the number of days their non-resident employees work in a given state for withholding on wages and deferred income
• Collecting and maintaining required documentation for wage allocation purposes
• Withholding taxes for non-resident telecommuters
• Documenting records in the anticipation of audit by the state
• Drafting internal policy and procedure statements and internal employee communications with respect to the updated policies
• Negotiating voluntary disclosure agreements with state departments of revenue
7Employment tax advisory services Resources you need when you need them |
Our Employment Tax people make the difference. They help many Fortune 500 companies to gain efficiency in their non-resident withholding process, and help them to achieve and maintain compliance. This experienced team has deep knowledge of the non-resident withholding compliance process. This experience, coupled with access tools EY has developed, allows us to help you achieve compliance by:
• Using modeling to construct a baseline evaluation of key travel states, various forms of compensation, potential exposure and state-by-state statutes of limitation
• Tracking the number of days a company’s non-resident employees work in a given state for withholding on wages and deferred income
• Collecting and maintaining required documentation for wage allocation purposes
• Calculating withholding taxes for non-resident telecommuters
• Providing reports with data for documenting records in the anticipation of audit by a state
• Drafting internal policy and procedure statements and internal employee communications with respect to the updated policies
• Educating the traveling employee population
• Negotiating voluntary disclosure agreements with state departments of revenue as needed
Our approachOur Employment Tax professionals have developed a domestic mobility tool program that calculates non-resident withholding taxes on large numbers of traveling populations based on data you provide to us. We calculate non-resident withholding tax amounts by state on a biweekly, monthly, quarterly or annual basis depending on your needs. In addition to using this domestic mobility tool, we also collect and maintain documentation required for wage allocation purposes, as well as answer your questions through the use of our professional financial planner call centers.
Domestic mobility: creating an efficient non-resident withholding tax compliance process
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Statutory electionsPlanning ahead — unemployment tax opportunities benefiting both businesses and statesWhat better time than now to give consideration to ideas and strategies that could reduce cost in upcoming years?
State legislative and regulatory provisions provide employers with options that not only help businesses recognize an immediate tax benefit, but may also assist state employment agencies administratively and financially. These options are collectively referred to as “statutory elections” and include voluntary contributions and joint accounts, each explained below.
Voluntary contributions — There are 27 states that allow voluntary contribution elections, whereby an employer may prepay its state unemployment tax with the potential of obtaining a reduced unemployment insurance tax rate in the following year. By obtaining a reduced rate, businesses can potentially reduce their overall unemployment tax burden. At the same time, these accelerated unemployment tax contributions provide the state with interest-free dollars used for the payment of unemployment benefits and help replenish the state unemployment trust funds.
Joint accounts — There are 12 states that allow joint account elections whereby multi-corporate organizations may reduce their unemployment tax liabilities by combining the state unemployment experience of two or more related corporations to obtain a single tax rate based on the combined experience. By mathematically combining the unemployment experience, the members of a joint account can share their reserves, leading to an overall reduction in state unemployment taxes. Additionally, the implementation of the joint account election does not alter the corporate structure of any participating company.
Voluntary contribution and joint account elections require knowledge of various state rules and regulations that may vary by state. Before electing to implement a voluntary contribution or joint account, an analysis should be done to quantify the consequences of making the election. While the elections may provide an immediate tax benefit for the employer, they may have a long-term adverse consequence on the unemployment tax rate. Clearly, employers must weigh the benefits of the potential short- and long-term effect on the unemployment tax rate.
9Employment tax advisory services Resources you need when you need them |
2013 state provisions for voluntary contribution and joint account elections
State Voluntary contribution deadline Joint account application deadline/number of years applicable
Arizona January 31 February 28/2 years
Arkansas March 31 December 1/2 years
California Not applicable for 2013 Permanent
Colorado March 14 Not applicable
Connecticut Not applicable September 30/1 year2
Delaware Not applicable Permanent
Georgia 30 days from mailing of rate notice Not applicable
Hawaii Not applicable December 31/1 year
Indiana 30 days from mailing of rate notice Not applicable
Kansas 30 days from mailing of rate notice Not applicable
Kentucky 20 days from mailing of rate notice Not applicable
Louisiana 30 days from mailing of rate notice Not applicable
Maine 30 days from mailing of rate notice Not applicable
Massachusetts 30 days from mailing of rate notice Not applicable
Michigan 30 days from mailing of rate notice Not applicable
Minnesota April 30 Not applicable
Missouri January 15 April 1/2 years
Nebraska January 10 Not applicable
New Hampshire Not applicable Not applicable
New Jersey 30 days from mailing of rate notice May 31/3 years
New Mexico March 1 Not applicable
New York March 31 March 31/2 ¼ years
North Carolina 30 days from mailing of rate notice Not applicable
North Dakota April 30 Not applicable
Ohio December 31 December 31/1 year
Pennsylvania 30 days from mailing of rate notice Not applicable
South Carolina Not applicable December 1/1 year
South Dakota December 31 Not applicable
Texas 60 days from mailing of rate notice Not applicable
Washington February 15 Not applicable
West Virginia 30 days from mailing of rate notice 30 days/1 year
Wisconsin November 30 Not applicable
10 | Employment tax advisory services Resources you need when you need them
Unemployment claims administration and tax servicesManaging unemployment claims can be a complex and time-consuming process. Proper documentation, accurate record-keeping and timely responses are key elements to making sure a company pays only what it appropriately owes. EY not only helps clients process unemployment claims efficiently, but also provides recommendations for process improvements that, if implemented, may lead to long-term benefits. EY offers businesses a much-needed choice in the marketplace and can demonstrate to clients the important role unemployment claims administration plays in an overall employment tax management program.
When do businesses need help?Whether unemployment claims processing is handled internally or outsourced to a third party, there are a number of situations that could require immediate attention from an experienced and skilled unemployment claims professional. For example, when a former employee has been separated and files a claim for unemployment benefits, the proper presentation of the facts and documentation surrounding the separation is critical. Failing to respond timely or completely to the state agency claim can result in benefits being inappropriately charged to a company’s unemployment account. The accumulation of benefits paid out have an impact on unemployment taxes. If the unemployment claim reaches the appeal level, this stage may require assistance by a professional experienced in the unemployment determination process to confirm that all facts and documents are properly presented, so the state agency can make the appropriate decision on the claim.
EY understands that effective unemployment claims administration is a strong component of an overall employment tax management program that can lead to significant savings for businesses. A successful unemployment claims administration program must focus on proper unemployment claims processing and recognize the direct relationship between the claims and their effect on unemployment taxes. Our extensive tax planning experience, combined with a focus on efficient unemployment cost management, helps clients address and organize their employment tax needs.
When we perform unemployment claims administration and tax services we help clients address a broad spectrum of issues associated with unemployment tax management. These services include, but are not limited to:
• Unemployment claims review and response
• Appeals preparation and hearing assistance
• Benefit charge review
• Claims performance reports/reviews
• Educational modules
• Unemployment tax rate analysis
• M&A/refund studies
• Unemployment rate projections
• Claims and tax impact studies
• Internal rating allocation
• Unemployment insurance statutory elections
• Information services and publications
11Employment tax advisory services Resources you need when you need them |
Reports/ documents
12 | Employment tax advisory services Resources you need when you need them
Employment tax look-back reviewEmployment tax opportunities that benefit businessesIn response to current economic challenges, employers are increasingly diligent in their quest to reduce costs and increase capital, making it the perfect time to consider a look-back review — an employment tax-focused analysis to uncover areas of federal, state and local employment tax recovery.
Wages and related expenses represent one of the top five corporate expenditures, and because of the current economic climate, employment tax liabilities will continue to increase over the next several years. In addition, to meet budgetary objectives, many companies have placed greater reliance on third-party payroll providers. The result is a transformed payroll department that is challenged to keep pace with the rapidly changing landscape of employment tax compliance. This leaves insufficient time for the retroactive review and prospective focus that are necessary to identify compliance gaps, implement cost-saving initiatives, or identify and recover employment tax overpayments. Through a look-back review, our experienced team of Employment Tax professionals delivers the resources and focus necessary to identify opportunities to improve financial performance within the employment tax process. Examples of areas where a look-back review can lead to refunds and/or future cost reduction include:
• M&A — The moment a merger, acquisition or reorganization is contemplated, an intricate system of federal, state and local employment tax requirements is triggered. From due diligence to the filing of returns, opportunities arise to manage employment tax costs. And, because most taxing jurisdictions allow businesses to file corrections for prior periods, it is often not too late to look back for savings and refund opportunities. With years of experience in guiding businesses through these
transactions, our Employment Tax team is positioned to provide the employment tax skills necessary in the planning, implementation and post-implementation review of mergers, acquisitions and reorganizations.
• Unemployment rate analysis — The current economy has overloaded the states’ unemployment insurance trust funds, causing many states to make rapid legislative and administrative changes that impact employers’ state unemployment insurance rate calculations. Even in stable employment periods, rate calculation errors resulting in tax overpayments can and do occur. However, that risk is far greater in these changing times. This type of tax overpayment can be avoided by reviewing the rate calculations and protesting erroneous rates by the applicable state deadline. Unfortunately, if protests are not made in a timely fashion, employers must pay at the higher incorrect rate, even if the rate error was caused solely by the state.
It is never too late to perform a look-back review and identify potential employment tax savings. A look-back review puts the tedious effort of identifying employment tax savings opportunities in our hands so that payroll departments can keep their focus on current tasks.
In a recent look-back review for a major US retailer, EY’s Employment Tax team identified more than $3.8 million in employment tax recoveries and tax benefits.
Our look-back review processFirst, we request access to: (1) the past three years’ federal and state employment tax returns and other related documents, (2) a description of the company’s merger/acquisitions and restructurings for the prior three years and (3) a copy of the company’s organizational chart describing the legal structure of the parent(s) and subsidiary(s).
Opportunities Events
• Acquisitions
• Mergers
• Reorganizations
• Divestitures
• Compliance
• Legislative changes
• Payroll conversions
• Recent outsourcing
• Decentralized payroll functions
Information Past three-year data
• Federal Form 940, Employer’s Annual Federal Unemployment Tax Return
• Supporting state credit schedule to 940
• State unemployment tax rate notices
• State unemployment tax quarterly returns for the current and prior two years
• Collect relevant employment tax information needed in order to qualify for any preliminary tax refunds
• Conduct analysis to quantify any employment tax refund opportunities
• Initiate discussions with the identified taxing jurisdictions and initiate recovery process
• Submit EY refund calculations to appropriate state jurisdictions for substantive review
• Act as liaison with state tax jurisdiction personnel to confirm refunds/credits are successfully secured
• Written documentation of findings
• Forms for signature for federal, state and local taxing authorities
Process
13Employment tax advisory services Resources you need when you need them |
Inbound payroll and employment tax compliance servicesInbound payroll and employment tax complianceEY’s Employment Tax team helps clients evaluate and comply with complicated federal, state and local payroll and employment tax compliance requirements. Specifically, our national team can help inbound companies with payroll and employment tax services to seamlessly implement strategies that match their long- and short-term objectives. We also provide a wide range of distinct services, including consulting and/or outsourcing, to address the challenges facing global businesses today.
From the moment a company enters a new jurisdiction, the significance of the payroll and employment tax processes cannot be overlooked. Federal, state and local laws governing payroll and employment tax compliance for a new entity are complex, vary by jurisdiction and can be costly if improperly implemented or not adhered to. It is essential that the payroll and employment tax implications and requirements be considered in each of the three phases of US business start-up: (1) planning and system configuration, (2) monthly and quarterly compliance and (3) annual and ongoing compliance.
Why global entities turn to EYWith skilled and experienced payroll and employment tax professionals in the US and around the world, our firm is positioned to meet the needs of global companies with operations in the US. Our national resources are well versed in federal, state and local payroll and employment tax matters that include, but are not limited to, income, Social Security, Medicare, unemployment, and disability taxes and workers’ compensation insurance. We can also advise as to how these pertain to non-resident aliens under various work scenarios. Specifically, our professionals can provide global businesses with the following US payroll and employment tax services:
Initial consultation to establish requirementsThorough review and interaction with business to establish appropriate protocols, business requirements and compliance considerations
Formal documentation and setupFormal documentation of procedures, processes and considerations to include initial setup of employment tax calculations and review of earnings subject to federal, state and local employment taxation
Registration and notificationFederal, state and local income and unemployment tax requirements advisory and/or processing for new business
registrations and other federal, state and local filing/notification requirements
Electronic tax payment and filing requirementsFederal, state and local income and unemployment tax requirements advisory for electronic payment and returns filing for newly created reorganized entities
Monthly and quarterly complianceOngoing calculation of payroll and employment tax liabilities, communication of net payment and net tax liabilities, and completion of all federal, state and local employment tax returns (i.e., Forms 941 and state/local equivalents)
Annual complianceAnnual compliance reporting with all federal, state and local payroll and employment tax requirements, which would typically include:
• Filing of Forms W-2, 1042-S, 941 and 940
• Reconciliation of Forms W-2/1042-S to previous filings at the federal, state and local level
• Calculation and reporting inclusion of imputed income on various fringe benefits
• Review and reconciliation of all employment tax deposits for accurate reporting
• Review of prior unemployment tax reporting and accurate assignment of prospective years’ unemployment tax rate
15Employment tax advisory services Resources you need when you need them |
The employment and human capital life cyclesChallenges and opportunities
Recruiting/hiring
Investment• Site selection• New investment
• Green implementation
Rationalization• Consolidation• Closure• Outsourcing
• Work Opportunity Tax Credit/point-of-hire credits
• Targeted hiring
• Federal and state zone credits
• UI claims administration
• Severance pay planning
• Layoff segregation
• Job creation credits
• HR/payroll transaction support
• Transformation planning and implementation
• Executive and incentive compensation
• HR/employment tax cost management
• Training credits/grants (federal and state)
• I-9/E-verify
• Withholding allowance certificates
• Multistate non-resident withholdings
• Global and domestic mobility
• Employment tax filings
• Payroll consolidation
• Statutory elections/voluntary contributions
Continuity• Maintenance• Process improvement• Regulatory compliance• Reinvestment
OnboardingEmploymentand capitallife cycles
Training
Compensation and benefits
Mobility
Growth
Separating
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Debera Salam [email protected] +1 713 750 1591
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Mike S. Willett [email protected] +1 404 817 4637
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