PayrollOrg’s Government Relations Task Force (GRTF) Federal Issues Subcommittee acted on two issues in July: maintaining IRS funding and requirements for Form W-2c, Corrected Wage and Tax Statement.
IRS Funding
PayrollOrg sent a letter to the U.S. Senate committees on appropriations and budget urging senators to maintain promised IRS funding. “Providing the IRS with predictable support to modernize, hire, and train new staff, as well as work with stakeholders to improve processes and procedures, is vitally important to payroll professionals directly responsible for withholding approximately 70% of the annual revenue collected by the IRS,” PayrollOrg said.
Draft Form W-2c Comments
In its comments on the draft Form W-2c (88 F.R. 27588, 5-2-23), PayrollOrg raised two issues for the IRS to provide guidance: union and pension plan considerations and 401(k) plan borrowing situations.
Union situation. In situations where an employee is a union member but is not yet eligible to participate (i.e., not vested) in an employer-offered pension plan, the employer is still required to contribute to the plan. PayrollOrg asked whether the retirement plan box in Box 13 on the Form W-2, Wage and Tax Statement, should be checked.
401(k) borrowing situation. Employees are allowed to borrow from their 401(k) retirement plan. Generally, when funds are borrowed, contributions are stopped. When an employee pays the borrowed amount back through a payroll deduction and is not otherwise adding to the plan, payroll professionals need instructions on whether to check the Box 13 retirement box on Form W-2.
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Alice P. Jacobsohn, Esq., is Director of Government Relations at PayrollOrg.