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Filing Payroll Tax Reports Electronically

Updated: Jan 4, 2023

Well, Skipity-Do-Dah-Day the IRS is now pushing small employers to move away from paper filing payroll tax reports (forms 941, 940, 943, 944, and 945…also, W-2 and W-3 forms). Why? Probably several reasons. One being the IRS is short-handed and is having trouble processing anything that comes to them in the form of paper.

Now the “official” IRS reasons for choosing to electronically file your payroll tax reports are… 1)It saves time; 2)It’s secure and accurate; 3)The filer gets an electronic confirmation of acceptance within 24 hours.

But wait! There’s a catch. In order to do this, you must purchase IRS approved software. Some of the top brands are, Gusto, Paychex Flex, QuickBooks Payroll, Workful, OnPay, and ADP. AND, you then must apply for an “Online PIN” with the IRS. It can take more than 45 days to get this.

Regarding the “It saves time” claim by the IRS, our experience has been it takes about as much time to print a piece of paper, fold it and put it in a stamped window envelope as it takes to go through the many steps to electronically transmit a return.

We do whole-heartedly agree that electronically filing is MUCH safer and more accurate than sending a piece of paper that a person must manually enter into a computer. Hey! People make mistakes and paper gets found in non-secure places all the time.

There is a bigger issue at stake here. Why? Oh why is a small employer preparing their own payroll tax reports in the first place? There are so many ways to make an error that could literally take YEARS to get resolved. Plus, the risk of having to go through a payroll tax audit either on the Federal or more likely the state level. Those are NOT fun!

There is a simple solution out there that we encourage our business clients to use (and most do). It’s called “Employee Leasing.” Basically, the business stops being an “employer of record” and an outside payroll service takes over the legal responsibility of being an employer. In reality, the only thing that changes is the employer’s name on the W-2. Additional services that outside payroll providers do include are outsource HR duties. (Hiring, firing, drug-testing, etc.) Also, the outside payroll services usually offer Medical Insurance packages at very good prices. So, a small employer of say less than 10 employees, can offer their employees as good (or better) Health Insurance that their larger competitors offer. (Are you loosing good employees who want Health Insurance?)

So, there you have it. You can torture yourself and file all your payroll forms electronically…whoopie! Or you could outsource it and spend your time much more productively, providing your business service to more customers.

Have you heard? 2 Sam 14:4 says, “And when the woman of Tekoa spoke to the king, she fell on her face to the ground and prostrated herself and said, ‘Help, O King!’”

Kelly Bullis is a Certified Public Accountant in Carson City. Contact him at 882-4459. On the web at Also on Facebook.

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