Ready For Your Payroll Software Update?

SEWilco writes "A federal payroll tax reduction for two months is being pushed by the President. Paying less money to the government seems good, but if the law is changed it will change the payroll taxes in January and February. Many of us can well imagine what that will do to the many payroll systems which are already programmed with the 2012 tax rates."

Comments

Hardly a Surprise

[Anonymous Coward]

The possible extension -- or not -- of the reduced payroll tax has been discussed in the news for some time. I'd hope that at least some of the people who maintain these systems have been paying attention. It's just a change in the withholding tables, after all.

Re:Hardly a Surprise

[skids]

It's just an extension. If some payroll department cannot handle this, how did they handle the original tax break? Add to that, why is it suddenly Obama's fault that the congress can't get its act together and pass a clean bill (e.g. one that doesn't have a "lets grind up orphans and serve them in school lunches" provision or whatnot.)

I'm confused

[broginator]

"A federal payroll tax reduction" Is this a reduction of federal tax for all jobs, or a reduction of taxes for federal jobs?

Software update?

[Lumpy]

If your payroll software is that crappy that you have to update it for this change then please buy some real stuff. All you do is change the tax tables.

Honestly, what crap software out there requires a full software update to change tax tables?

Re:Software update?

[Attila Dimedici]

The problem is that it is only for two months and it is only for people who earn less than a certain amount. This is not income tax (which has varied according to how much you make since before computers were used to calculate payroll). This is for Social Security and Medicare taxes, which traditionally have been the same percentage for everyone up to a certain dollar amount of income (everything over that is not taxed). This only applies to people who make less than a certain amount. So, I suspect that, unlike income tax, this has traditionally been done by a straight percentage calculation (one that traditionally, also, automatically debited the same amount out of the the employer's payroll account without showing it on the paystub).

Re:Software update?

[The Bastard]

Earlier in my career, I worked on a payroll system. It's not as straightforward as one might think, as payroll systems rarely are similar. In fact, the term "payroll" should really be replaced with "compensation", and "system" replaced with "rules engine system".

In a simple small business, compensation is probably pretty straightforward. Hourly employees, owner takes a salary. But what if an owner takes a draw against the the equity of the business?

Up the chain a bit, you now may have union dues to account for, bonuses, stock options instead of "cash", severance, and various other--often contractually obligated--quirks. Does health insurance count as compensation from the company? The smartphone with ultra data plan? The company car?

On the political side, what are the basic rules? What are the exemptions the politicians put in for their buddies?

There are a lot of little gotchas in "payroll" systems, and the use case testing needs to be spot on. Because no one wants their paycheck screwed up.

Re:Srsly?

[Anonymous Coward]

Yea, I have to say, this is only a complicated change for seriously poorly written payroll software. And are we really making the argument that in the middle of a massive recession it's acceptable to have our economic policy handcuffed because someone wrote some really crappy payroll software and doesn't want to fix it?

That's Congress for you...

[PortHaven]

"We never think before we act, and when we act, we act with politics in mind. Not intelligence in mind."

Progress - a forward or onward movement (as to an objective or to a goal) :

Congress - opposite of progress.