IRS Issues Notice 1036: Early Release Copies of the 2018 Percentage Method Tables of Income Tax Withholding
On Thursday, January 11th, the IRS released Notice 1036, titled “Early Release Copies of the 2018 Percentage Method Tables for Income Tax Withholding” which contains the updated 2018 Withholding Tax Tables. Employers are advised to utilize the new withholding tax tables to properly calculate payroll taxes when processing employee payrolls and should implement them as soon as possible, but should ensure they are utilized no later than February 15, 2018.
Payroll tax errors can be incredibly costly for businesses that can be levied steep fines, interest and penalties by the IRS. Civil Tax Penalties on Employment Taxes levied against employers for errors (broken down into the following categories: Accuracy, Bad Check, Delinquency, Estimated Tax, Failure to Pay, Federal Tax Deposits, Fraud and Other) jumped significantly from $4.96M in 2014 to $6.05M in 2016. This highlights the vital need for employers to make certain they are utilizing the correct information and avoid frequent errors associated with processing payrolls (manual data entry has been shown to be the most error-prone payroll activity and is typically around 35%).
This is why many employers choose to outsource their payroll processing services to a trusted payroll vendor like Checkmate, which provides the technology and expertise (over 20+ years) necessary to ensure timely and accurate payrolls each pay period and proper calculation and payment of both the employer and employee portions of payroll withholding taxes.
References: Internal Revenue Service Databook for 2014 and Internal Revenue Service Databook for 2016