Payroll Compliance & Reporting Flashcards
7 cards from real CPS practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Payroll Compliance & Reporting flashcards as text
An employer receives an IRS CP2100 notice. What does this notice indicate and what action is required?
Answer: Payees provided incorrect TINs; employer must begin or continue backup withholding
A CP2100 notice alerts payers that information returns contain missing or incorrect TINs, triggering backup withholding obligations.
Which corrected form must an employer file to correct a previously filed Form 941 that understated wages and taxes?
Answer: Form 941-X
Form 941-X (Adjusted Employer's Quarterly Federal Tax Return) is used to correct errors on a previously filed Form 941.
Under the Multistate Tax Commission guidelines, which factor is NOT typically used in a state's payroll factor for apportioning employee compensation?
Answer: Where the employee's supervisor is located
The supervisor's location is not a recognized factor; states use where services are performed, base of operations, and residence when other factors are absent.
An employee participates in a cafeteria plan (Section 125). How does a pre-tax health insurance premium election affect their payroll taxes?
Answer: It reduces wages subject to federal income tax, Social Security, and Medicare taxes
Pre-tax premiums under a Section 125 plan reduce the employee's taxable wages for federal income tax, Social Security, and Medicare, lowering both employee and employer tax liability.
What is the penalty for intentionally filing a fraudulent Form W-2 with incorrect information?
Answer: $570 per form with no cap
Intentional disregard of W-2 filing requirements carries a penalty of $570 per form with no maximum cap, as opposed to the tiered penalties for non-intentional errors.
Which federal law requires employers to report newly hired and rehired employees to a state directory within a specific timeframe?
Answer: Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA)
PRWORA of 1996 mandates that employers report new hires to the state new hire registry, typically within 20 days of the hire date, to assist in child support enforcement.
A company uses the annualized wage method to calculate federal income tax withholding for a semi-monthly employee. What is the first step in this method?
Answer: Multiply the employee's semi-monthly wages by 24 to determine annualized wages
The annualized method first converts the period wages to an annual equivalent (semi-monthly × 24), then applies the annual withholding tables, and finally divides the result by 24.