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Is there help available for
ensuring payroll is being done correctly and in compliance
with applicable laws?
Yes. The Additional
Resources section lists state and federal offices
that are set up specifically to provide information and assistance
on payroll related questions. The IRS has separate providers
available to offer assistance with payroll questions related
to tribal entities (e-mail)
and municipalities (e-mail).
The State Department
of Labor (DOL)
can provide information on state payroll requirements.
Department of Community and
Economic Development Local
Government Assistance staff
conduct regional payroll workshops and also provide on-site
community assistance.
What information is needed
in order to do payroll?
The following information must
be available in order to pay employees:
- Know how the organization's
pay periods are set up, i.e. weekly, bi-weekly, or semi-monthly.
(State Law AS 23.05.140(a) requires employers to establish
at least a monthly or semi-monthly pay period. See Current
Alaska Statutes.)
- Have a time sheet or record
of time worked for each employee during the pay period that
is signed by a supervisor or other authorized person.
- Know the employee's pay rate
and whether that rate is paid by the hour or if it is a
flat salary.
- Have a W-4 form providing
information on each employee's tax status for their tax
withholding rates. (The W-4 also includes other required
information such as social security number, address, etc.)
- Know if there are any special
circumstances such as: additional withholding requested
by the employee, child-support payments that an employer
may be required to withhold and send to a designated entity,
tax liens, any direct deposit information, retirement plan
information, leave policy, or any other special information
affecting an employee's pay.
Where would the employee
information needed to do payroll be kept?
The employer is required to
maintain a personnel file on each employee with a record of
earnings and other payroll information. Since information
in the personnel file is considered confidential, these files
should be kept in a locked file cabinet and access should
be limited to certain authorized individuals.
NOTE: If there is a change to
the employees withholding information or name change, it is
the responsibility of the employee to revise their W-4 and/or
contact the Social Security Administration with the name change
information. Payroll personnel are not authorized to make
changes unless the employee has done the necessary paperwork.
What government forms and
publications are needed to do payroll?
A complete list and instructions
are available in Commerce's Payroll Handbook for Small Communities.
You should also contact your local IRS
and State Department
of Labor offices
to confirm what you need.
At a minimum, the following
are required:
- A federal form W-4 and a
federal form I-9, filled out by the employee providing the
employee's personal information and verifying the employee's
eligibility to work in the U.S.;
- A federal form 8109 or 8109-B
which is used to make your federal tax deposits (employee
withholding, social security, and medicare) to your federally
approved financial institution;
- A federal form 941 to make
quarterly withholding and payment reports to the federal
government;
- A federal form W-2 to make
annual withholding and payment reports to the employee and
federal government;
- A federal form W-3 to transmit
the W-2s;
- A State Department of Labor
Employer's Quarterly report form; and
- Federal publication 15 Circular
E in order to calculate the employee's federal withholding
tax, unless you have a payroll program that already contains
this information.
How do you get federal and/or
state forms?
The state and federal governments
have regional offices in Alaska that have payroll forms and
forms are available on the Internet. You can also request forms
by phone from state and federal agencies.
What is an EIN and SEIN?
EIN stands for Employer Identification
Number. SEIN stands for State Employer Identification Number.
Every employer must request
and be assigned an employer identification number (EIN) from
the Internal Revenue Service (IRS). When the IRS assigns the
EIN, it will also provide federal payroll tax forms and tables
needed to calculate and pay federal taxes. The IRS uses the
EIN as a reference number to keep track of employee and employer
taxes. An EIN only needs to be applied for once. If your organization
has been an employer in the past, it probably already has
an EIN.
The SEIN is the state employer
identification number that the state DOL assigns to the employer.
The employer requests this number from the State Department
of Labor, Employment
Security Division (ESD).
How do I pay the federal
payroll taxes?
After determining the correct
amount of federal tax owed, the federal income, Social Security,
and Medicare taxes are paid with the same check using form
8109 or 8109-B. The payment must be submitted to a bank that
is qualified to receive federal tax deposits. Check with the
bank that your organization does business with to find out
if it is approved to receive federal tax payments.
When does the employer pay
the federal payroll taxes?
Depending on the employer's
payroll tax deposit history for a given "look back period"
the IRS determines whether it is a monthly or semi-weekly
depositor. Our recommendation, however, is to deposit payroll
taxes at the same time the payroll is done. This helps
to streamline the process since all the steps are completed
at one time, ensures that the deposits are made timely, and
eliminates possible confusion about when and if payroll taxes
were deposited.
What are some of the differences
that determine whether a person is treated as an employee
or contractor?
The IRS "Circular E, Employers
Tax Guide" provides the IRS definition of an employee.
The State Department of Labor, Employment Security Division
also provides information and assistance in making this determination.
There are some general rules
that will help correctly identify whether a person is an employee
or a contractor. If the employer has control over the worker's
job, pay, timeline, and duties performed, they are considered
an employee.
A contractor, however, performs
work that is not in the regular course of business for the
employer and the employer does not have direct control over
the contractor's daily activity. Contractors are generally
hired to perform a certain task for the employer. Once that
task has been performed there are no longer any ties between
the contractor and the employer. Also, the contractor may
work for several employers at the same time. When in doubt,
check with the IRS and/or state DOL.
A worker can either be a contractor
or an employee. If a worker is a contractor the employer is
not normally responsible for withholding taxes and payments
from their pay. If a worker is an employee, the employer is
responsible for calculating withholdings; paying the federal
government withheld income taxes, Social Security and Medicare
payments (both employee and employer portion); and reporting
employee taxes to the IRS.
How soon after employment
terminates does an employee have to be paid?
Alaska Statute 23.05.140(b)
outlines these requirements. (See the Current
Alaska Statutes.) If the employer terminates the
employee the employer has three working days to pay the employee
all wages, salaries, or other compensation. If the employee
terminates employment, the employer may pay the employee all
wages due at the next regular payday. If the employer received
notification of the employee's termination less than three
working days prior to the payday, the employer may pay the
employee on the following payday without penalty.
What are the rules regarding
overtime and where would I find information on exemptions?
Payment of overtime is addressed
in AS 23.10.060. An employee eligible for overtime compensation
must be paid one and one half times their regular pay rate
for any time worked over eight hours per day and any time
that is over 40 hours per week. There is a long list of exemptions
in AS 23.10.055 that may affect a city or village. AS 23.10.055(5)
exempts employees of federal, state, or local governments
from overtime compensation under the state Wage and Hour Act,
but not the federal Fair Labor Standards Act. (See the Current
Alaska Statutes.)
As an employer is the city
responsible for reporting stipends paid to council members
and others as meeting fees?
Yes. City governments are required
to report stipends as wages. This means that a council member
is treated like any employee and federal income tax, social
security, and medicare taxes for council members or other
government officials receiving stipends are withheld and the
stipends are reported on a W-2.
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