CPP Quality & Compliance Flashcards

A company pays employees semi-monthly. In December, a payday falls on December 31, but the office is closed. The employer pays on December 29 instead. For Form W-2 purposes, in which tax year are those wages reported?

Answer: The current year, because wages are constructively received when available

Wages are constructively received when made available to the employee, so wages paid December 29 are reported in the current tax year.

Under the Affordable Care Act (ACA), which IRS form does an applicable large employer use to report health coverage information to the IRS about its full-time employees?

Answer: Form 1094-C

Applicable large employers file Form 1094-C as the transmittal form and furnish Form 1095-C to employees; Form 1094-C is the IRS reporting form for ALE information.

An employer failed to deposit payroll taxes by the required due date. The IRS assessed a failure-to-deposit penalty. Under which circumstances can the employer qualify for abatement of the penalty?

Answer: The employer has never been penalized before and had reasonable cause for the failure

The IRS may abate failure-to-deposit penalties for first-time filers or where the taxpayer demonstrates reasonable cause and no willful neglect.

For payroll tax purposes, what is the significance of the 'common law' test for determining worker classification?

Answer: It examines behavioral, financial, and type-of-relationship factors to classify workers as employees or independent contractors

The IRS common law test uses behavioral control, financial control, and relationship-of-the-parties factors to determine if a worker is an employee or an independent contractor.

A payroll department uses a checklist to verify each payroll run before funds are released. This practice is an example of which type of internal control?

Answer: Preventive control

A pre-payment checklist is a preventive control because it stops errors before they occur rather than detecting them afterward.

When reconciling payroll, which comparison helps verify that employee deduction amounts remitted to benefit carriers match the amounts deducted from employee paychecks?

Answer: Comparing carrier invoices to payroll deduction registers

Reconciling benefit carrier invoices against payroll deduction registers confirms that deductions collected from employees were correctly remitted to the carrier.

An employee receives a $600 performance award paid through payroll. What is the correct supplemental withholding rate for federal income tax if using the flat rate method?

Answer: 22%

The IRS flat supplemental withholding rate for federal income tax is 22% for supplemental wages up to $1 million.