Employee Payroll Updates

As you close the books on 2011 and prepare for 2012, you should remind your employees to adjust their payroll tax withholding for both federal and state. As personal tax returns are completed, and the amount of income tax that’s refunded or owed is fresh on everyone’s mind, it’s an ideal time to adjust up or down the amount withheld. Here are links to the payroll forms:


New employees will also need to fill out an I-9 Employment Eligibility Verification form.


Finally, if you’ve used subcontractors, pay rent, have paid legal fees, or plan to use subcontractors, you’ll need to get a W-9 Request for Taxpayer Identification Number and Certification filled out for each subcontractor.

Tax Rules eased for Employer-Provided Cell Phones

The IRS announced on September 14 in Notice 2011-72 , that an employee’s business and personal use of an employer-provided cell phone is not taxable income to the employee as long as the employer can show it provided the cell phone to the employee for a legitimate business reason, and not as a substitute for extra compensation. In a memo to its employment tax auditors, the IRS also said that an employer’s reimbursement of an employee’s cost for a personal cell phone plan is not income if the employer requires the employee to use the phone for business.

Business Standard Mileage Rate to Stay at 55.5¢ in 2012

The IRS has announced that the business standard mileage rate for transportation
expenses paid or incurred beginning January 1, 2012, will be 55.5 cents per mile,
unchanged from the rate in effect during the final six months of 2011.

The mileage rate may be used to compute the amount to reimburse employees
who are using their own cars for business purposes. It may also be used by employers
that elect to use the “cents-per-mile” valuation method for purposes of determining the
amount that needs to be imputed to an employee’s income for personal use of certain
company-owned or leased non-luxury vehicles