A few weeks ago, I wrote about the impending consequences of Congress’ failure to provide payroll processors with 2011 tax rates. That particular Wall Street Journal article discussed a potential intervention by the Treasury Department, but I just read another piece, by Bloomberg, on employers who are starting to take matters into their own hands and warning their workers about higher tax withholding beginning in January.
Dennis Danilewicz, manager of payroll services at New York University’s Langone Medical Center, says the delay is unlike anything he has seen before and is making everyone extremely nervous. Who can blame them? In an economy with so many uncertainties, you deserve at a minimum to know how much you are bringing home to your family each pay period. Ron Moser, head of human resources for a school district in New York, claims that many of his school employees could lose $50 each paycheck – hardly an insignificant sum when you’re making between $20,000 and $40,000.
It was inexcusable for Congress to punt the tax cut vote until after the election, regardless of political liabilities. Not only does it cause unnecessary stress for families, but businesses could very well face increased costs if the IRS provides payroll departments with an additional 2011 withholding table after November 20. According to Bloomberg, "Jodi Parsons, manager of payroll and accounts payable at IFMC, a health care management company based in West Des Moines, Iowa, said if the IRS issues two sets of withholding tables, her two-person office could be overwhelmed with processing changes to W-4 forms." Furthermore, companies could be unable to immediately implement last-minute legislative action, thereby angering employees across the nation after they see major discrepancies on their January paychecks.
While it’s still a waiting game at this point, I encourage all of you to contact your Members of Congress ASAP and urge them to move swiftly on this very important issue. Remind them that expiration of the Bush tax cuts will deliver a profound blow to our economy – a risk we simply cannot afford.
https://www.ntu.org/news-and-issues/taxes/extend-tax-relief.html
https://www.ntu.org/news-and-issues/taxes/tax-reform/economists-support-lower-rates.html