Automated Integration:
Saves Time and Eliminates Errors

One of the major advantages of using an in-house system like LTtax for managing your payroll withholding and unemployment taxes is the automated integration of data with other systems. Once you key your data into LTtax it can be used for multiple purposes within your financial systems which saves you time, money and re-keying errors.

With many outsource service providers it can be difficult and costly to get data from them promptly and in a format that can easily integrate into your financial systems.

LTtax resides between your source payroll system (Peoplesoft, SAP, GEAC, Lawson, etc.) and your financial system(s), such as accounts payable (A/P) and general ledger (G/L). Because financial data for your federal, state and local jurisdictions reside in LTtax, LTtax can be set up to feed A/P and G/L. For jurisdictions paid by check, you can feed A/P based on the turnaround time it takes for your company to cut a check or otherwise make the payment. The same is true for wire payments. And best of all, an electronic file containing check and voucher numbers can be fed back into LTtax thus completing the payment cycle.

Feeding the G/L system is another popular feature of LTtax. The system stores G/L account numbers on a division and/or jurisdiction level. A division in your company may represent a cost center, a plant, a pay group, etc. within a FEIN. A jurisdiction may represent one Ohio School District or the entire State of Ohio. Each may be assigned a separate G/L number. This flexibility suits various financial structures and is a hallmark of the system.

When you implement LTtax it is important to examine every process you are doing manually to see whether the information already exists in LTtax and, if so, we will assist you in extending the use of automation in your company.

To learn more about LTtax, contact us: call 212.643.1768, send an email info@lttax.com or visit our website www.payrolltax.com.

Is FICA Required On Severance Pay?

In a landmark decision, the U.S. Court of Appeals has concluded that severance paid to an involuntarily displaced workforce is considered taxable wages under FICA, effectively reversing the lower Court of Federal Claims' ruling.

In CSX Corporation v. United States, the CSX Corporation argued successfully that severance payments made as a result of an involuntary reduction in workforce should receive the same tax treatment as Supplemental Unemployment Benefit (SUB) payments, which are not considered "wages" as defined by FICA. The Court of Federal Claims' initial ruling prompted many companies to file protective refund claims in an effort to recoup Social Security and Medicare taxes (FICA) previously paid.

According to John Lihzis, President of Total Management Solutions, Inc. (TMS), one of the largest companies specializing in the design and administration of SUB Plans, "Companies filed for over five billion dollars in protective refund claims with no guarantee that CSX would prevail. Had they implemented a SUB Plan instead, both the former employees and the companies would have realized a guaranteed tax savings by excluding FICA taxes from SUB payments.

SUB Plans have been used for over 50 years and have gained in popularity significantly in America over the last ten years. By providing tax and cash flow incentives to companies and former employees, SUB Plans are changing mainstream corporate culture. With this landmark decision and affirmation from the Federal Appeals Court, this will most certainly continue for years to come.

Is a SUB Plan right for your company? If you anticipate a reduction in workforce, whether seasonal, short-term or permanent, our strategic partner TMS can help you evaluate your options. TMS has saved companies millions of dollars by establishing and administering SUB plans.

If you would like to learn more about SUB Plans, contact Stew Bailenson at sbailenson@lttax.com or 815-308-7633. You can also visit the TMS website at www.subpay.com.