Question

Chapter 10 discusses the payroll tax withholding and reporting responsibilities of employers. Do you agree with the reporting requirements for tips? Why or why not?

Answer 1

What is Payroll Tax?

Payroll Tax is the the tax imposed either on employees or on employer and collected by employer on behalf of employees and paid to the government. The tax is imposed basing on the minimal percentage of the salary. The tax paid by the employer out of his pockets, is certainly for the benefit of employees. The law requires the employers to deduct the different types of payroll taxes. Example: Payment of unemployment taxes, local income tax and state taxes etc...

Payroll tax withholding and reporting responsibilities are:

As an employer, should take up the responsibilities of withholding and payment of taxes to the government. The law specifies certain taxes to be deducted and it is the responsibility of the employer to ensure that such taxes has been deducted on time. All employers should take up the responsibility of collecting taxes by following manner:

Salary Data: The employer should collect the information related to the total income earned by the employer during the financial year.

Deduct Taxes: The employer should deduct the appropriate tax depending upon the income earned by the employee.

Arrangement of funds: The employer should manage the funds collected from the employees as a part of deductions from salaries and pay to the government.

Report of taxes: Reporting of taxes collected from the employees and paid is submitted in a specified form to the government.

The employers should comply with the relevant laws and regulations made, so if there are any type of non compliances then penalties and criminal procedures may be imposed against them. This is the main reason why the employers should account for the taxes collected and paid to the government.