The federal and state governments need revenue, in some cases desperately, and so it is vitally important that payroll-related policies and procedures, controls, and recordkeeping be up to par, Aureon Herron-Hinds, senior manager, Deloitte Tax LLP, told attendees at Tuesday morning’s session on effective internal controls for the payroll tax function.
Hinds, a former IRS employee, reminded that revenue agents are employed to aggressively ferret out underpayments. Conversely, it is the organization’s responsibility to avoid penalties and interest accruing from non-compliance.
Hinds encouraged those involved in the payroll process to think like an IRS agent when considering the adequacy of their processes and controls, especially those related to “low-hanging fruit” for audits. These include proper tax withholding for employees who work in multiple states; payment of sales and use taxes in every location where the organization does business; maintenance of W-4, I-9, and other required forms; and proper administration of T&E reimbursements. Good ongoing communications between payables staff, the human resources function, legal counsel, and other relevant parties is essential to achieving rock-solid compliance, Hinds said.