It appears that the 2 month approach on the payroll tax demanded by Senator Reid can’t be implemented properly. Perhaps it’s now time to return from vacation and join House Republicans in passing a yearlong extension that prevents a tax hike on 160 million Americans?
Two-Month Payroll Tax Holiday Passed By Senate, Pushed By President, Cannot Be Implemented Properly, Experts Say
December 19, 2011
Officials from the policy-neutral National Payroll Reporting Consortium, Inc. have expressed concern to members of Congress that the two-month payroll tax holiday passed by the Senate and supported by President Obama cannot be implemented properly.
Pete Isberg, president of the NPRC today wrote to the key leaders of the relevant committees of the House and Senate, telling them that “insufficient lead time” to implement the complicated change mandated by the legislation means the two-month payroll tax holiday “could create substantial problems, confusion and costs affecting a significant percentage of U.S. employers and employees.”
ABC News obtained a copy of the letter, which can be read HERE.
The NPRC is a non-profit trade association that does not take positions on policy. The group represents organizations that provide payroll processing and services to more than 1.5 million employers, impacting one third of the private sector.
“We’re neutral and we’d be happy to do the work,” Isberg told ABC News.
“The concern is really for those who don’t use a payroll service provider,” he said. Americans will have different outcomes, he said, causing confusion “because they’ll have different outcomes. Some will have it done on time, some won’t, some will have adjustment notices later in the year.”
The two-month payroll tax holiday, which the president has said should be extended throughout 2012, will mean that wages would face a Social Security tax of 4.2 percent during January and February, but it would increase to 6.2 percent in March.
Isberg wrote that “many payroll systems are not likely to be able to make such a substantial programming change before January or even February. The systems affected tend to be highly complex, normally requiring at least ninety days for a change of this magnitude for software testing alone; not to mention analysis, design, coding and implementation.”
Part of the issue has to deal with Congress’ desire to make sure “that highly compensated employees not enjoy the full benefit of the 2% tax break because of bonuses or other high compensation falling into the first two months of the year,” Isberg wrote, saying “there simply is insufficient time to implement this major change in withholding requirements.”