Tuesday, January 21, 2014

Maryland Considers Regulation of Payroll Service Providers

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In 2013 a Maryland law was enacted to create a new commission to study the regulation of payroll service providers in the state. The law is in response to the AccuPay, Inc., payroll fraud scandal that occurred when the payroll services firm stopped operating while under investigation for failing to remit federal and state withholding and UI taxes on behalf of its clients. As a result of these actions, AccuPay, Inc., clients have been severely hurt by late fees and penalties and may potentially have to repay their taxes if AccuPay never did soon their behalf.

The American Payroll Association has attended both meetings of the study commission, with APA Senior Manager of Government Relations and Multinational Certification, Brian O'Laughlin, Esq., testifying that IRS guidance requires all payroll reporting agents to provide a disclosure statement to clients advising them of their ultimate liability for payroll taxes. O'Laughlin also pointed out to the commission that bonding and licensing requirements can have negative consequences.

As a result of testimony like this, the commission has agreed that a bonding requirement will not be necessary and would be too burdensome. Check back with PayState Update and Pay News Now when the commission releases its official recommendations.