Critical Payroll Record Keeping: What to Keep and How to Keep It Presented on Tuesday, October 3, 2017

Transcription

1 Critical Payroll Record Keeping: What to Keep and How to Keep It Presented on Tuesday, October 3,

2 2016 The Payroll Advisor 2

3 Housekeeping 3 Credit Questions Today s topic Speaker 2016 The Payroll Advisor

4 To earn RCH credit you must 4 Stay on the webinar, online for the full 60 minutes Be watching using your unique URL Certificates delivered by , to registered , by November 3 rd 2016 The Payroll Advisor

5 Our Focus For Today 5 The importance of record keeping in a payroll department Regulatory agencies with payroll record keeping requirements including: Department of Labor IRS Child Support Others Details of exactly what data needs to be saved and in what format can it be kept Does Sarbanes-Oxley still matter in 2016 for record keeping? Mergers, acquisitions and how it affects payroll record keeping Keeping the data secure to remain in compliance

6 For Today 6

7 The Importance of Recordkeeping 7 Used to: Calculate gross-to-net pay & deduct correct withholdings Report information to the proper taxing authorities Prove or demonstrate employer has met all regulatory requirements Meet company s business operating requirements (wage hour; tax etc.)

8 Key Points 8 There is supposedly no one size fits all when it comes to recordkeeping but actually you can keep everything you ever create forever and a day and that will work! But if you don t want to keep everything forever, then you must consider each agency s requirements when creating your overall plan

9 Key Points 9 Regulations usually tell you what individual data items to keep but not what records or reports So you have to determine if you keep your payroll register ; edit reports ; deductions register or whatever you call the different payroll reports produced What do you produce that contains the data you need to keep Payroll records can be found and stored in multiple systems including Payroll itself, HR, Timekeeping and the General Ledger

10 Internal Revenue Service 10 Internal Revenue Code Federal Unemployment Tax Act (FUTA) rnational-taxpayers/federal- Unemployment-Tax

11 U. S. Department of Labor 11 U.S. Department of Labor, Wage and Hour Division Fair Labor Standards Act (FLSA) 1.htm

12 Department of Homeland Security 12 U.S. Citizenship and Immigration Services (USCIS) U.S. Immigration and Customs Enforcement (ICE) Immigration and Nationality Act (INA) Immigration Reform and Control Act 1986 (IRCA) Illegal Immigration Reform and Immigrant Responsibility Act of 1996 (IIRIRA) m-274.pdf

13 Office of Child Support Enforcement 13 An Office of the Administration for Children and Families and part of the U.S. Department of Health and Human Services Child Support Withholding Orders Medical Support Orders

14 Abandoned Wages 14 Link to states websites Click on state you want Record retention will be in the holder reporting area

15 15 Federal Wage and Hour Law Fair Labor Standards Act

16 Records to be Maintained 16 No particular form is required for the records Must be accurate Records that must be kept include the following: 1. Employee s full name and social security number 2. Home address, including zip code 3. Date of birth, if under Sex and occupation

17 Records, Continued Time and day of week when employee s work week begins 6. Regular hourly rate of pay for any workweek in which overtime compensation is due must explain amounts excluded from regular rate and explain basis of computations 7. Hours worked each day 8. Total hours worked each workweek 9. Basis on which employee s wages are paid example: $9.00 per hour, $440 a week, piecework

18 Records, Continued Total daily or weekly straight-time earnings 11. Total premium pay for overtime hours 12. All additions to or deductions from the employee s wages 13. Total wages paid each pay. 14. Date of payment and pay period covered by the payment

19 To Be Preserved For Three Years 19 Payroll records: all payroll and other records containing employee information and data required Must be kept for 3 years after last date of entry These include all the data items listed on previous slides

20 To be Preserved for Three Years 20 3 Years from last date they were in effect Collective bargaining agreements (union contract or Memorandum of Understanding) Certificates authorizing the employment of industrial home workers, minors, learners, students, apprentices and handicapped workers

21 Records to be preserved for two years 21 Basic employment and earnings records. From the date of last entry, all basic time and earning cards or sheets on which are entered the daily starting and stopping time of individual employees, or of separate work forces, or the amounts of work accomplished by individual employees on a daily, weekly, or pay period basis (for example, units produced) when those amounts determine in whole or in part the pay period earnings or wages of those employees.

22 Records To Be Preserved For Two Years 22 Wage rate tables. From their last effective date, all tables or schedules of the employer which provide the piece rates or other rates used in computing straight-time earnings, wages, or salary, or overtime pay computation.

23 Records To Be Preserved For Two Years 23 Order, shipping, and billing records: From the last date of entry, the originals or true copies of all customer orders or invoices received, incoming or outgoing shipping or delivery records, as well as all bills of lading and all billings to customers (not including individual sales slips, cash register tapes or the like) which the employer retains or makes in the usual course of business operations. Records of additions to or deductions from wages paid

24 Record Format 24 Records may be maintained and preserved on microfilm or other basic source document of an automatic word or data processing memory provided that adequate protection or viewing equipment is available Reproductions must be clear and identifiable by date or pay period Must be available upon request

25 25 Internal Revenue Service Internal Revenue Code Federal Unemployment Tax Act

26 IRS Internal Revenue Code 26 All employers must maintain the required records Employment tax records must be kept for: Four years after the date the tax becomes due Or The date the tax is actually paid (if later) for the return period to which the records relate

27 Information that Must be Kept 27 The Employer Identification Number (EIN) Amounts and dates of all wage, annuity, and pension payments Amounts of tips reported by employee The fair market value of in-kind wages paid Names, addresses, social security numbers, and occupations of employees and recipients Any employee copies of Form W-2 or W-2c that were returned as undeliverable Beginning and ending dates of employment for each employee

28 Information that Must be Kept 28 Periods for which employees and recipients were paid while absent due to sickness or injury and the amount and weekly rate of payments the employer or thirdparty payers made to them. Copies of employees' and recipients' income tax withholding allowance certificates (Forms W-4, W-4P, W-4S, and W-4V) and any back up paperwork Dates and amounts of tax deposits made and acknowledgement numbers for deposits made by EFTPS

29 Information that Must be Kept 29 Copies of returns filed including forms 941, 943, W3, and Form W-2 Records of allocated tips Records of fringe benefits provided, including substantiation

30 In Addition 30 Amount of compensation subject to withholding for federal income tax, Social Security, Medicare Taxes and Additional Medicare Tax Amount withheld for each tax

31 In Addition 31 Pay period covered by each payment of compensation Reasons why total compensation and taxable amounts for each tax or different Request from an employee to use the cumulative method of wage withholding

32 Format Required 32 The IRS has no strict requirement on the format used to retain payroll records May be kept electronically, magnetic media (microfilm or microfiche) or on paper Must be kept in a manner that will enable IRS to ascertain whether any tax liability has been incurred

33 Format Required 33 Must have reasonable controls to ensure integrity, accuracy, reliability and prevent unauthorized alterations Retrieval systems must have indexing Must be able to produce paper hard copy if electronic or submit electronic copy if requested

34 FUTA 34 Four years after due date of Form 940 or date tax was paid whichever is later Total amount employee compensation paid during the calendar year Amount of compensation subject to FUTA tax

35 FUTA 35 State unemployment contributions made, with separate totals for amounts withheld and not withheld from employees wages All information shown on Form 940 Reasons why total compensation and taxable amounts are different

36 36 Department of Homeland Security Immigration Reform and Control Act Form I-9

37 Immigration Reform and Control 37 Form I-9 Employment Eligibility Verification Must retain completed Form I-9 for as long as the individual works for the employer Retention determined at time of termination Three years after the date of hire or one year after the date employment is terminated whichever is later For example: employee retires after working for 15 years need to retain Form I-9 for 16 years

38 Immigration Reform and Control 38 Forms I-9 may be retained on paper, microform or electronically You may chose to copy or scan documents an employee presents when completing Form I-9 but are not required to If you do copy them you must either retain them with Form I-9 or stored with employee s records

39 Form I-9 Paper Retention 39 Only the pages on which data is entered must be retained Must have original handwritten signatures May store on-site or at an offsite storage facility Must be able to present within three days of request

40 Form I-9 Microform Retention 40 Only the pages on which data is entered must be retained Must have original handwritten signatures May be on microfilm or microfiche Must have well-maintained equipment to create and view that can produce legible paper copies Must be able to present within three days of request Must be indexed

41 Form I-9 Electronic Retention 41 Only pages what have data entered on must be retained May generate and retain electronically Form must be legible and no changes can be made No additional elements can be added You may change systems when needed

42 Form I-9 Electronic Retention 42 Must be indexed May use any electronic recordkeeping, attestation, and retention system that complies with DHS standards This includes most off-the-shelf computer programs and commercial automated data processing systems

43 43 Other Recordkeeping Considerations Abandoned Wages Child Support Mergers and Acquisitions Sarbanes-Oxley

44 Abandoned Wages 44 Record Retention Requirements for Abandoned Wages 3 Years 4 Years 5 Years 6 Years 7 Years 10 years OR IA, AZ, CO, FL, IL, KY, MA, MD, MO, NC, NJ, NV, NY, OH, UT, WI, WY WA CA, ID, NE, RI, AK, AL AR, DC, GA, HI, IN, KS, LA, ME, MI, MT, ND, NH, NM, OK, SC, SD, TN, TX, VA, VT, WV Connecticut requires holders to retain records for 20 years The following states have no provisions: Delaware; Minnesota; Mississippi; and Pennsylvania

45 Income Withholding/Medical Support Orders 45 Must retain as long as IWO and Medical Support Order is in effect Must maintain as a record under FLSA for deductions If employee terminates must follow state law as to retaining to reactivate if employee returns

46 Retention by State Chart 46 State(s) Alabama; Delaware; District of Columbia; Florida; Georgia; Illinois; Indiana; Iowa; Kansas; Kentucky; Louisiana; Maryland; Massachusetts; Minnesota; Nebraska; Nevada; New Hampshire; New Jersey; New Mexico; North Carolina; Pennsylvania; South Dakota; Tennessee; Texas; Vermont; Virginia; West Virginia; Wyoming How Long to Retain After Employee s Termination No law or policy Arizona California Alaska Arkansas; Colorado; Hawaii; Idaho; Michigan; Missouri; Ohio; Oregon; Utah; Wisconsin Maine; Montana; North Dakota; Rhode Island Mississippi; New York Connecticut; South Carolina; Washington Oklahoma At least 90 days 1 year after termination 3 years after termination Until Notified Until released by child support agency Do not retain, return to agency No retention (unless employee may return at later date) Orders to be kept on file indefinitely Information courtesy of Office of Child Support Enforcement website

47 IWO Record Retention After Termination By State WA MT ND ME OR ID SD MN WI NY VT NH MA CA NV UT WY CO NE KS IA MO IL MI OH IN KY WV VA PA DE MD NJ RI CT AZ NM OK AR TN SC NC MS AL GA TX LA FL No law or policy 3 years after term Kept indefinitely AK Until Notified At least 90 Days The Payroll Advisor HI Do not retain Do not retain-return to agency 1 year after term Until Released by Agency

48 Merger and Acquisition Considerations 48 There are several types of mergers and acquisitions and recordkeeping requirements vary with the type of transaction For example in equity transactions and statutory merger or consolidations, the successor employer retains the tax liabilities of the predecessor employer While in an asset transaction, typically tax liabilities are retained by the predecessor employer Payroll must be involved to determine recordkeeping requirements

49 Sarbanes-Oxley Effects on Payroll 49 Applies only to publically traded companies Requires internal controls for assuring the accuracy of financial reports and disclosures Audit committee must be established by the board of directors Work papers supporting the audit must be kept for 7 years

50 50 Securing Your Data Developing a Disaster Plan Methods and Tips

51 Securing Your Payroll Data 51 Payroll needs four major assets to operate at peak efficiently Facilities Hardware Network Data Only the data is irreplaceable and it must be secure and backed up

52 Some Causes of Data Loss 52 Simple human error Operating system/software malfunctions Hardware failure Damage from fire, smoke, water, manmade and/or natural disasters Power outages Employee theft or fraud In this day and age: Sabotage, hacking, viruses

53 Develop a Payroll Disaster Plan 53 Backup Copying important data and maintaining duplicate copies is a must Off-site storage Copy information and place it in a secure storage; include a copy of your payroll software Recovery The ability to retrieve stored information after an outage or disaster

54 Methods to Secure Your Data 54 Electronic Storage Systems otherwise known as document management systems Outsourced hosting CD/DVD Media imaging such as microfilm or microfiche And of course Hard copy paper

55 Tips for Storing Your Secure Data 55 Location must be fire, water and natural disaster proof Don t put in area where an earthquake will occur if you are also in the same area Fireproof not fire resistant filing cabinets or safes Data must be organized for easy access when the disaster occurs indexing is a must Each container or file must be clearly labeled Keep all data current replace after each payroll if possible

56 Outsourced Data Storage 56 Storage Service Provider or SSP Provides computer storage space and management including back-up and archiving Reduced start-up and recurring costs Lower administrative costs Less strain on internal resources Complete disaster recovery services

57 57 Are There Any Questions?

58 How Can Ascentis Help Me? 58 Ascentis Payroll is a Web-based, Internet payroll system that allows you to process payroll in real-time, ensuring 100% accuracy, flexibility and control. With live processing and instantaneous auditing, Ascentis Payroll software can reduce payroll processing time by as much as 30%.

59 To earn RCH credit you must 59 Stay on the webinar, online for the full 60 minutes Be watching using your unique URL Certificates delivered by , to registered , by November 3 rd 2016 The Payroll Advisor

60 On-Demand Webinars 60 Watch from anywhere, at anytime, at no cost to you! 2016 The Payroll Advisor

61 Download Slides? Watch again? The Payroll Advisor

62 Sharing the Education The Payroll Advisor

63 Contact Us The Payroll Advisor