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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."

32 of 105 comments (clear)

  1. Siren voice.... by spaceplanesfan · · Score: 5, Funny

    Attention! We need you, all you COBOL programmers!.

    1. Re:Siren voice.... by Slashdot+Parent · · Score: 2

      Attention! We need you, all you COBOL programmers!.

      Heheh. But seriously, payroll software is designed to handle arbitrary changes in the tax rates. A simple update of tax tables is all that would be required to deal with this. Assuming your employer's trusty accountant remembers to do it.

      --
      They don't grade fathers, but if your daughter's a stripper, you fucked up. --Chris Rock
    2. Re:Siren voice.... by mrmtampa · · Score: 2

      Attention! We need you, all you COBOL programmers!.

      It's a twenty minute task but I'll have to bill by the month.

      --
      "There are more things in heaven and earth, Horatio, than are dreamt of in your philosophy." Hamlet (I, v, 166-167)
  2. Hardly a Surprise by Anonymous Coward · · Score: 2, Insightful

    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.

    1. Re:Hardly a Surprise by skids · · Score: 3, Insightful

      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.)

  3. Srsly? by Anonymous Coward · · Score: 4, Informative

    They'll load a different tax rate table. I'm sure it's modular enough they can just change a table (or two, or three) and be done.

    Seems easy to me. But then I write software for a living, so what would I know.

    1. Re:Srsly? by Anonymous Coward · · Score: 3, Insightful

      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?

    2. Re:Srsly? by simcop2387 · · Score: 2

      #define PERCENT = / 100.0f
      #define PAYROLL_TAX = 12 PERCENT

      Just like we learned in school!

    3. Re:Srsly? by spudnic · · Score: 3, Informative

      This is exactly it. And almost every shop that processes payroll subscribes to a service that updates the tax tables for you as the laws change. www.bsi.com is one.

      I'm sure they have the tax tables written up either way the vote goes so they can get it out the door.

      --
      load "linux",8,1
  4. Software update? by Lumpy · · Score: 3, Insightful

    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?

    --
    Do not look at laser with remaining good eye.
    1. Re:Software update? by Maximum+Prophet · · Score: 2

      Right, plus I'm sure the tax software companies already have multiple tables drawn up, one for each proposal.

      This is not a Y2K type issue. Unless Congress develops something truly weird, there will be no problem.

      What might be a problem is if congress doesn't get it's rear in gear until March, then passes a retroactive tax cut.

      --
      All ideas^H^H^H^H^Hprocesses in this post are Patent Pending. (as well as the process of patenting all postings)
    2. Re:Software update? by Kamiza+Ikioi · · Score: 4, Funny

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

      Quicken 0.1a Private Garage Alpha "Cain" Edition running on 386 SX with DOS 5 known best for its 9/9/9 Sim City tax tables, no floating point operations, and inability to distinguish between charitable and political contributions.

      --
      I8-D
    3. Re:Software update? by Attila+Dimedici · · Score: 3, Insightful

      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).

      --
      The truth is that all men having power ought to be mistrusted. James Madison
    4. Re:Software update? by The+Bastard · · Score: 3, Insightful

      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.

  5. Anti-cyclic thinking by captainpanic · · Score: 3, Interesting

    It's fine to do some anti-cyclic economy... and I understand the merits.

    But wasn't it the idea that you reduce expenses in boon times, and go anti-cyclic, and thereby spend more in bad times?
    But the last decade, the USA has clearly acted cyclic, not anti-cyclic. The US has spent money like its life depended on it (and many thought it really did, with terrorists lurking in every corner of the world, all aiming to bomb the US back into the Middle Ages).

    It's surprising to see that there is even more money available... and it makes me wonder who will go down first in economic terms: the EU, or the USA.

  6. Change Management PITA by Anonymous Coward · · Score: 4, Informative

    As others have said, updating the rates in the tax tables is trivial. It actually takes us more time to go through change management process and get no less than 4 levels of approval to make the changes in the production payroll system.

  7. Re:On a separate note... by mwvdlee · · Score: 3, Funny

    ...fuck you /., my Karma is terrible for some stupid reason, so i start at -1? It's not like I'm trolling or flame-baiting, every one of my posts is on topic. So fuck you, that's what i have to say about that. I'll just start a new account. With blackjack, and hookers. In fact, forget the new account!

    Nope... not trolling or flame-baiting at all there.

    --
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  8. What? by lennier1 · · Score: 5, Funny

    A bunch of idiots introduces the need for a change in the last minute? That's something I'm sure no developer would've expected.

  9. Re:On a separate note... by icebraining · · Score: 3, Informative

    Actually they start at 0. And the "stupid reason" is simply because you don't seem to write informative, interesting or insightful posts, and funny doesn't give you karma.

  10. Re:For two months? by Attila+Dimedici · · Score: 4, Informative

    Actually, I don't think that is it. My bet would be that most payroll systems are coded to assume that everyone who pays the payroll taxes (Social Security and Medicare) pay the same percentage up to the limit (you only pay these taxes up to a certain amount because you only collect based on income up to a certain amount). They are now introducing a system whereby those who earn less than a certain amount pay less than those who earn more than that (and the cutoff point is different from the amount which you don't pay this tax on the income above that amount--although you still pay for everything less than that amount that you earn).

    --
    The truth is that all men having power ought to be mistrusted. James Madison
  11. Don't blame the software, blame the government by MikeRT · · Score: 2

    At ~7m lines of legal language, the federal tax code is as large as many operating systems in complexity. Writing code that can correctly handle its business rules is probably as complex as many of the systems that Wall Street puts into place for real-time trading and risk analysis.

    As a conservative, I hate to say Clinton was right, but Bill Clinton knocked it out of the park when he said we need to just lower rates and then wipe out most of the exemptions and credits. His only fault was not advocating the complete abolition of those things so the tax code would be predictable.

  12. That's Congress for you... by PortHaven · · Score: 3, Insightful

    "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.

  13. The problem isn't the tax tables by flux+pinner · · Score: 2

    ...the problem is that many companies/institutions close the pay period and issue pay stubs well in advance of the pay date. For example, I'm paid on the 1st of the month, but my January 1 pay check is for a pay period that ends December 22 (this Thursday), and by the evening of December 23 I will have an electronic pay stub waiting for me that shows my Social Security deduction for January 1. If Congress extends the tax holiday on, say, December 27, that doesn't leave much time to update the system, re-issue all the pay stubs, and change all the direct deposit information with the banks. Not impossible, but not a real friendly after-Christmas gift to throw to all the HR departments all across the country. And it's no way to run the world's largest economy.

    --
    Reasoning is never, like poetry, judged from the outside at all.
  14. more October filings for IRS by peter303 · · Score: 3, Interesting

    The December 2010 tax changes meant several official IRS forms were not available until February or even March. A lot of this had to do with basis information now mandated on brokerage 1099s. So the old habit of filing in early February for anticipated refund becomes less possible. Even April filing is threatened by lack of forms and data. More people get the automatic October extension tax-preparers tell me.

  15. I Hope They Don't Extend It by Slashdot+Parent · · Score: 2

    I really wish that they would not extend the payroll tax cut. Not that I'm itching to pay more taxes or anything, but are we giving up all pretense that Social Security is an earned benefit?

    --
    They don't grade fathers, but if your daughter's a stripper, you fucked up. --Chris Rock
  16. Re:For two months? by emurphy42 · · Score: 4, Interesting
    This. More specifically, Googling (2012 Social Security tax cut) leads to http://www.foxnews.com/politics/2011/12/20/payroll-processors-say-two-month-fix-undoable/

    According to the proposed law, the two-month extension of a 4.2 percent taxable wage is applied only to the first $18,350 of income. Wages exceeding $18,350 paid during the first two months of 2012 would be subject to a 6.2 percent Social Security tax rate.

    Yes, any decent payroll software has tax table updates, but they don't all support multi-tier rates like this. I consult on an accounting suite with a payroll module, and they had to release a full-on code patch this year to support a change in Connecticut that took effect in August, whereas they usually just release simple updates that save you the trouble of hand-entering all the new rates.

  17. Multiple tax tables by tepples · · Score: 2

    A simple update of tax tables is all that would be required to deal with this.

    Unless a program's tax table data structure isn't sufficiently fine-grained to deal with multiple tax tables that apply to different parts of a single year.

    1. Re:Multiple tax tables by Slashdot+Parent · · Score: 4, Informative

      Unless a program's tax table data structure isn't sufficiently fine-grained to deal with multiple tax tables that apply to different parts of a single year.

      I can't speak for all payroll software packages, but QuickBooks can definitely handle this. All rates are specified with arbitrary effective dates. I'd be shocked if any payroll system could not handle mid-year changes. Stuff changes mid-year all the time.

      --
      They don't grade fathers, but if your daughter's a stripper, you fucked up. --Chris Rock
    2. Re:Multiple tax tables by tepples · · Score: 2

      Thank you for the information. Now I have a second question: If payroll tax has always been a flat percentage, does the infrastructure exist in QuickBooks to support a switch to a tax schedule that's progressive like income tax? Other comments to this topic explain how the first $18,000 or so is taxed at a lower rate.

    3. Re:Multiple tax tables by Relayman · · Score: 2

      Payroll tax since 1980 has not been a flat percentage. The graduated tax rates are built into the income tax table. The OP is talking about Medicare and FICA tax rates which have been flat but also the same for the whole year.

      --
      If I used a sig over again, would anyone notice?
    4. Re:Multiple tax tables by Sloppy · · Score: 2

      Stuff changes mid-year all the time.

      Stuff does, but for these taxes I think this may be the first time in history. (I'm admittedly a few years behind the times on this one.) If the software naively treats taxes in a special way different from the myriad other withholdings and expenses, I can see this being a slight pain in the ass. Back when I was working on this stuff, the 1987 version of our program would not have been able to handle this, whereas the 1988 version could, because unifying the code simply made things easier. Call the former behavior stupid if you want, but when you inherit a maintenance legacy, all you care about is all the work you have to do, not whose fault it is. And payroll reeks of being a world of legacy, where no one is writing brand new applications, so I'd expect there to be plenty of crazy limitations out there.

      (Income tax withholding changed mid-year a few times if I recall, but one of the things about income tax is that being spot-on with the withholding isn't really all that important. If someone has to manually change rates mid-year and misses it by a week or two, it really doesn't matter, because people "settle up" when they file their tax returns every year. Close is good enough. Not so with Social Security and Medicare. If you screw it up then you have to adjust for it in later checks.)

      Not that legacies excuse anything; sometimes maintainers just have to suck it up and do the work.

      But software issues aside, I think lowered Social Security and Medicare withholdings and accrued employer expenses is just plained whacked, unless we're giving up on Social Security. If that's the plan, then those assholes need to come out and say it. DEFUNDING Social Security while keeping the pretense that it'll real, is just plain dishonest.

      It's valid to either cut revenue and services, or increase revenue and services, but anyone who cuts revenue and says the services will still be there, is just another lying Republicrat scumbag.

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    5. Re:Multiple tax tables by matthewd · · Score: 2

      "Payroll tax" is often used to refer to the Social Security tax, when one wishes to obscure the nature of the tax (ie that it funds the Social Security program). "Withholding tax" is more normally used to refer to federal income tax based on the income tax tables.

      What the Senate bill did on the Social Security tax was set a limit of $18,350 (1/6 of 110,100, the limit for the entire year) for the first two months of the year that the 4.2% rate applies to. 6.2% applies above that limit. After the first two months of the year, rates are yet to be determined.

      So instead of a simple calculation involving a single rate and a single wage limit for the employee portion for the entire year, we have three rates, two for the first two months and one for the last 10 months, and two limits that apply. For reporting the quarter totals (Form 941) employers would need to report the total wages for the first two months below $18,350, and the total wages above $18,350 along with the total wages for the third month in the quarter.

      I would be very surprised if any payroll software were capable of handling this calculation for the Social Security tax right now. Up until now, there was no reason to build such a ridiculous calculation into your payroll software.

      It seems like to me that it used to be that politicians, or at least their staff, had some inkling of the real world effect of changing tax policy, and the need for lead time for the IRS and SSA not to mention software vendors to adjust to these changes. At the worst, changing tax rates, calculations or reporting requirements should be done at the end of quarter if not the year.

      News reports suggest to me that the only sticking point between the Senate and the House is how to fund the bill. The two month time frame apparently came about because that the Senate and House only agreed to funding sources that totaled enough to continue the tax break for that period of time.