CPP CPP Quality & Compliance 3

Question 1

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?

Accepted Answer

The current year, because wages are constructively received when available

Answer

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

Question 2

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?

Accepted Answer

Form 1094-C

Answer

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.

Question 3

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?

Accepted Answer

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

Answer

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

Question 4

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

Accepted Answer

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

Answer

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.

Question 5

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?

Accepted Answer

Preventive control

Answer

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

CPP - Certified Payroll Professional Practice Test

CPP - Certified Payroll Professional Practice Test

CPP CPP Quality & Compliance 3