Kelly J. Bullis: Electronic Filing of Payroll Tax Returns

Kelly Bullis

Well, Skipity-Do-Dah-Day, the IRS is now pushing small employers to ditch the paper filing of payroll tax returns (Forms 941, 940, 943, 944, and 945…also, Forms W-2 and W- 3). Why? Probably several reasons. One being that the IRS is understaffed and struggling to process anything that comes to them in paper form.
Now, the “official” IRS reasons for choosing to file your payroll tax returns electronically are: it saves time; it is safe and precise; the declarant receives an electronic confirmation of acceptance within 24 hours.
But wait! There is a catch. To do this, you must purchase IRS-approved software. Some of the biggest brands are Gusto, Paychex Flex, QuickBooks Payroll, Workful, OnPay, and ADP. And, you must then apply for an “Online PIN” from the IRS. It may take more than 45 days to get it.
As for the IRS’ “It saves time” claim, in our experience, it takes about as long to print a piece of paper, fold it, and put it in a window envelope. stamped enough to go through the many stages of electronic transmission. submit a return.
We wholeheartedly agree that e-filing is MUCH more secure and more accurate than sending a piece of paper that someone has to manually type into a computer. Hey! People make mistakes and paper ends up in unsecured places all the time.
There is a bigger issue at play here. Why? Oh, why does a small employer prepare their own payroll tax returns in the first place? There are so many ways to make a mistake that could literally take years to resolve. Plus, the risk of having to go through a federal or more likely state level payroll tax audit. These are not fun!
There is a simple solution that we encourage our business customers to use (and most do). This is called “employee leasing”. Basically, the company ceases to be an “employer of record” and an external payroll service takes on 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 included by external payroll providers are HR outsourcing tasks. (Hiring, firing, drug testing, etc.) Also, external payroll services usually offer medical insurance packages at very good prices. Thus, a small employer with less than 10 employees, for example, can offer its employees health insurance as good (or better) than that offered by its larger competitors. (Are you losing good employees who want health insurance?)
So here is. You can torture yourself and file all your payslips electronically… whoopie! Or you can outsource it and spend your time much more productively, providing your business service to more customers.
Did you hear? 2 Sam 14:4 says, “And when the wife of Tekoa spoke to the king, she fell with her face to the ground and bowed down and said, ‘Help, O king!'”
Kelly Bullis is a CPA in Carson City. Contact him at 882-4459. On the web at Also on Facebook.