Dear AccountMate Clients,
As previously discussed, the Social Security Tax Break Law passed on December 17, for the first time in history, decoupled the employER Social Security rate from the employEE rate. Thus, effective January 1, 2011 the employEE’s Social Security tax withholding rate was reduced from 6.2% to 4.2% of wages paid, but the employER’s rate remained at 6.2%.
Per IRS Notice 1036: Withholding Guide, the IRS recognizes this is an unprecedented change which requires significant effort to accommodate in payroll software applications, and the referenced link includes the statement that “Employers should implement the 4.2% employee social security tax rate as soon as possible, but not later than January 31, 2011.”
Last week AccountMate corporate released the update to address this issue for SQL/Express Version 8, SQL/Express and LAN Version 7, and LAN Version 6.5 using Upgrade Payroll – with updates for SQL/MSDE and LAN Version 6.5 (using Standard Payroll) forthcoming soonest.
This Special Edition NewsLine is to outline how the update operates once installed: Simply put, since any payroll run performed in 2011 prior to the update installation has OVERwithheld the employER FICA tax, the software recognizes this and will UNDERwithhold until the prior overage has been “used up”.
Please click here to review a PDF document, entitled Important FICA Change Information, which includes example calculations of how AccountMate handles the update.
As always, if you have any questions please feel free to either e-mail us at nexlan@nexlan.com or give us a call at (217) 431-7236.
Regards,
Kevin E. Stroud
NexLAN, LLC
https://nexlan.com
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