Medlin Software, Dennis

Received this today. My only practical reply was to suggest to contact their local Congress person and Senator (and if the businesses need the funds, they should be adjusting their deposits accordingly, instead of counting on a timely refund). "In the 2nd quarter many of them qualified for the retention credit on form 941. From the clients we have spoken to, none have received their refunds yet. I have been researching and it is only suppose to take 6 to 8 weeks. I am at a loss as to what to tell our clients. Do have have any idea why the refund is taking so long? Thanks for any information."

Yikes. Sounds like the new owner bought a job, and one that likely has not been paying well.

Interesting situation. Since most purchases are assets only, it may be the buyer's perspective the price was 185k, since they likely care not about the sales tax lien, and may only care a little about the creditor (if it is a key supplier they also want to use). May have some sort of off sale license to account for separately, depending on the situation.

The third version of the 941 was not a big programming change. The only issue was the late release of the final version means many, like me, already submitted Q3 before the new form was available (since so few "memo" deferred). The 944 and 943 will also be different, with an additional page for each...

I have a customer who sent in the Q1 layout for Q2, and it was rejected. If (now un)common sense were to be used, the Q2 form can still be used for Q3, but only time will tell what those folks in the forms design and processing locations have determined. The instructions for Q2 state not to use the Q1 form for Q2, but there is nothing that specific in the Q3 instructions (that I noticed).

After review and implementation (only one person's opinion!) it appears the second revision may still work, unless the employer elected to defer (the Presidential memo). Page 3 has a different "95" code, which should allow the scanning software to interpret each revision appropriately. Of course, that is using logic, which may not apply in this case, so use the old revision at your own risk. Personally, I mailed my form yesterday, before the new form dropped (I did not defer), so we will see if it bounces back.

The IRS dropped a third version of the 2020 941 yesterday. The new version is for Q3 and Q4, with some changes made for the Sept-Dec SS deferral option. While I have no inside information, I suspect any of the three revisions can be used, as long as the figures are correct, and the revision used will handle the employer's needs for the quarter being reported. It appears the IRS will differentiate the revisions via the "95" code at the top right of each page.

Federal reporting has wide leeway. They will happily take multiple 941 forms per EIN, as well as multiple sets of W2 forms per EIN. (They prefer one set per EIN, but there is no such requirement.) Other common reasons for multiple reporting: Internal accounting (one set of reports per location for instance). Multiple state reporting (one set of reports per state, which will become much more common in the new remote work scenario we live in). Multiple "other" jurisdiction reporting (such as having multiple local taxes, in an area without common reporting).

Nice of the spouse to help, likely because of (now un)common sense instead of worrying about "no good deed goes unpunished". Keep in mind it is clear the new client does not keep records well, so make sure you have built in a fee to act as their "file cabinet".

Missing, or left twisting in the wind: What figures to use on 941's and W2 forms for SS wages. How will reporting deal with SS wages and SS withheld not "matching"? How about in 2022 if the claw back is via a paycheck deduction (where allowed)? What about states where claw back via deduction is prohibited, or where an employee does not agree? (If someone really wants to defer, my suggestion is to not defer, but to create and execute a binding contract for a loan, with the loan being for the amount of SS withheld each paycheck, to be paid back before May 1, 2020, and with interest (waived if paid back before May 1, 2022). Such a contract likely solves any state claw back issues, and if unpaid, there are well known means of collection or handling the uncollected amount as additional wages.) What about those who apply for/receive aid, and have more disposable income for 2021, and less for 2022? How about garnishments? Same issue with disposable income. I am sure there are other issues yet to be discovered.

If withheld, it must be remitted. The employer cannot hold the withheld amount. The workaround that at least partially allows the deferral, without tweaking the IRS rules, is to not withhold at all, which makes the amount due zero. Another of several possible flaws is the lack (not that I looked hard) of any rule allowing anything other than legally required amounts to be withheld - in other words, will withholding more than the actual calculation, in early 2021, be permitted by an actual regulation? I think there was some mention to avoid causing issues with state laws (such as collecting a debt from a paycheck illegally.) There are localities which prohibit anything other than required withholding, not even allowing side agreements. There cannot be some sort of doubling or new calculation to recoup. Employer will have to track the deferred amount, and come up with a repayment method. If not repaid, then the amount itself becomes taxable wages, subject to taxation adjustments (amended forms likely). So much left unsaid, to chance, or to slip by via election not to enforce actual regulations... If I were forced to defer, the only way I could protect myself would be NOT to defer, but to enter into an actual loan agreement, contract, with each employee who wants to "defer". Then I would have something I could enforce with terms a judge could accept. Would need to have some sort of interest, if not repaid by end of April, so the loan would not be taxable wages too.

For clarity, many employees, and some employers, believe it is SS and Medi which could be deferred.

You probably will, once the first checks dated on or after Sep 1 are released, and the employees start asking their employers for the extra money, and the employers pass the buck to you. I have thousands of customers. Only one proactively asked, and it was from their personal paycheck perspective (owner/employer) as to how they should setup to get a larger paycheck. The others who have taken notice and contacted me have agreed, "much ado about nothing", until the employees start griping about their "missing" 7.45% "raise". While I have not completely formed a possible notice for employers to share, I expect to have to do so, to help employers not have to waste time answering the same questions over and over, and try to focus on staying viable. I have a slight hope employees, as a rarity, might just accept their employer is acting properly, given the situation, but I know better, and many employees will you know what and moan about their missing 7.45%.

When the treasury lead says it is optional, and with no apparent rush to put out directions for employers and employees, the only conclusion is it is much ado about nothing. Unless it is not optional;, I see no reason to modify my software. Those that want to take the risk and defer can already do so my manually changing the calculated value. I do not want to make it easy for an employer to get into a debt situation. The one piece which struck me is how employers are required to withhold (existing rules), and how the memo only offers deferral of payment.

Of my customers who have inquired, or responded to my email, only one was actually thinking they needed to do something. All others are planning on not deferring, unless there is absolutely no option. Their concern is the simple one, since it is a deferral, they should hold the money anyway (since it is not theirs to use!), so there is no point in deferring. Those who are still in business do not need to defer for three months, and they are worried about the cost of managing the deferral. If there comes a point where there is forgiveness, most figure they will be able to get a refund or credit on a future return. The rub for the employers is dealing with employee inquiries. So far, the employees, except for the obstinate ones, seem to be satisfied with the answer of "until more details are released", "unless the deferral is a requirement", etc.

Personally, I would not accept such a W4 as it is clearly not valid (back dated). If there was no valid W4 in place before the 2019 "checks" to be back dated, then it must be (for 2019) Single, 0 allowances, and no other adjustments. Not saying there is a good chance of getting caught, just that the slope is slippery. This forum is public, so it makes no sense to post anything "slippery" here, regardless of the chances of getting caught.

Separate yourself, and your client, from the "employee" who wants a made up (my term) W2 for 2019. Treat the "employee" as a stranger, and make sure the "employer" complies with all regulations. It may be best to refer to a forensic payroll expert who has experience cleaning up this type of situation without causing more problems, or causing you to be pressured to prepare forms which are not accurate.

My kids did, and heard the same warning you refer to. The message does not say they will arrange transportation. In their case, they do not need transportation so there was no issue in that regard, but I wonder what AAA would say if someone enforced the transportation clause? Candidly, I only keep AAA for my kids, since they are not always prepared to pay up front. --- They are in Yosemite valley. The garage (a AAA contractor) is not answering the door, or their direct phone. A ranger gave them a card to put in the window, so the car will not get towed as abandoned. They will deal with it when they are done hiking in several days. (They have a second car with them, they were going to leave one at each end to avoid being on the bus.)

So, ironically, one of my kids may need a vehicle towed later this week. Looking my my bene, I see this: Fortunately, he will not need a ride, and I may actually tow the vehicle here myself...

AAA, and all roadside services, are a network of local tow operators who agree to tow for whatever price the cal center offers. It could be the particular operator for that AAA service area (franchise area) came up with the policy. I would start with the actual operator, then complain to AAA about allowing this policy. --- For many roadside services, when you call their call center, they, in turn call local operators with an offer, sightly raising the offer until they get the tow sold. There is usually zero consideration to the closest truck or speed of arrival. In some remote areas, this can also apply to AAA (if they have no local operator, and agree to use non franchise trucks). The pay rate is very low for the tow operators, and they can bump you for a cash tow of five before they get to you. (I did not realize all of this until I got an RV, and had to dig into how the tow clubs work.) For local issues, AAA is great. Jump, gas, lockout, local tow, etc. You likely already know who the truck operator is. On the freeway, call the highway patrol. They will get a truck there ASAP, and in most cases, you can have them expedite your club tow company. Anywhere else, google a local company, pay them, and seek reimbursement. If your club does not reimburse, then let the club go. If you have a standard vehicle, review the owner's manual tow instructions while you wait, just in case they do not send a roll back truck. If you have anything non standard, know your tow requirements first, and make sure you demand the necessary equipment and/or operator is sent. And maybe just as importantly, unless you know the person arriving is from the company coming to get you, do not accept help from a gypsy driver.

Wash, rinse, repeat. Someone asks about my software, and it is clear they are simply looking to not pay a payroll service, and they have zero payroll experience or training. I inform no payroll software can make them qualified to manage a payroll. They reply their "friend" said it was easy. I suggest they ask their friend if they would be willing to teach them payroll processing rules, to which they answer "is that not what the software does?". I lose no sleep over these contacts, even the ones who pay first, then "need" to be refunded. I used to lose sleep with the grief I went through trying to keep these customers. Had one last week who paid first, asked for a refund when I would not setup their payroll for them and go over their reporting requirements. They then tried to reorder using a different name (same address though), as "their accountant" said they would teach them. I said no thanks, since they already ignored my request the second order be paid with a money order (to avoid a charge back), and that any such order would come with zero support for the first year (since they already had a refund because they were not competent to manage a payroll - IMO).

I, and others, disagree. If the only item on a W2 is "informational", then no W2. There is zero requirement for HA to be on a W2, despite what many believe. I understand, some believe the suggestion of including HA on a W2 is actually a requirement, but it is only a suggestion as a possible place to meet the notice requirement.

Another case of someone giving a W2 when it should not be given...

Those that do not treat themselves as employees (when required) with a reasonable wage, found out one of the consequences (PPP loan application). I was having a relatable discussion with a professional who pays themselves 25k in wages, once a year, for full time work, and 6 digits in distributions. The person does have earned letters after their name, but kept arguing what they have been doing is not an issue. It is the old story of do as I say, not as I do... I suppose, as they likely do not advice their customers to do the same.