IRS Issues Early Withholding Tables to Take Into Account TCJA Changes

The IRS has issued Notice 1036, Early Release Copies of the 2018 Percentage Method Tables for Income Tax Withholding.  These new tables take into account the changes made in P.L.115-97, better known as the Tax Cuts and Jobs Act (TCJA), which reduced individual income tax rates and made other changes.

As the IRS had indicated, the new tables continue to use withholding allowances in the computation of tax to be withheld, something often referred to as “exemptions” or “dependents” by many employees.  The amount has not actually just related to exemptions for years, so the fact that TCJA removed personal exemptions doesn’t mean that these allowances can no longer be used.

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Corporation Liable for Payroll Taxes Left Unpaid by PEO

When an employer decides to use a third party from which to lease employees, the employer does not escape liability for the payroll taxes if they remain unpaid even if the employer makes the payment.  This was the issue the IRS was looking at in Chief Counsel Advice 201724025

In this case the taxpayer had hired an outside professional employer organization (PEO) to manage its payroll.  Although the company had paid the PEO for the payroll and the amount that was due on the payroll taxes, the PEO failed to pay the payroll taxes.  The corporation discovered this fact on exam.

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Early Release Copy of 2017 Percentage Method Tables for Withholding Published


The IRS has issued the early release copies of the 2017 percentage method tables for income tax withholding in Notice 1036.

The tables are to be used to compute the taxes to be withheld from wages paid in 2017 by employers using the percentage method tables.  They will eventually be published in Circular E for 2017.

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Penalty Imposed By State Law For Untimely Payment of Final Wages is Not Subject to FICA, FUTA or Federal Withholding

If an employer is required by state law to made additional payments to an employee when their final wages are not paid within a specified time period is that payment subject to federal payroll taxes and/or federal withholding?  This is the issue addressed in Chief Counsel Advice 201522004.

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