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NPRCís Position Regarding Its Letter to Congress On H.R. 3630 - Payroll Tax Relief Proposals

Due to the many questions received concerning our letter of December 19, 2011 regarding a proposed two-month extension of the Social Security tax reduction, NPRC wishes to emphasize the following:

  1. NPRC is strictly neutral on whether a reduced Social Security tax rate is necessary or desirable.
  2. The concerns of NPRC are not politically motivated. NPRC is non-partisan and not affiliated with any political party.
  3. NPRC routinely advises policymakers as to the administrative implications of proposals affecting payroll and payroll tax administration.
  4. Enactment of H.R. 3630, as amended on December 16th, would create substantial problems, confusion and costs affecting a significant percentage of U.S. employers and employees.
  5. Establishing the proposed Social Security Taxable Wage limit of $18,350, to which a reduced 4.2% rate would apply through February 29, 2012, would require substantial reprogramming of computer systems.
  6. Programming of the magnitude that would be required normally takes a minimum of 90 - 180 days for an orderly transition.
  7. Programming of systems generally can not begin before the IRS announces what new recordkeeping and reporting will be necessary.
  8. Payroll service providers have appropriate resources to respond to such changes and are likely to be the best able of those affected to accommodate such tax law changes. Others may find it more difficult.
  9. NPRC proposes several alternatives to achieve the legislationís goal of extending the reduced Social Security tax rate, as indicated in its letter to Congress.

The NPRC letter was intended to explain in a neutral way the administrative difficulties inherent in the proposal. Interested parties may also wish to contact the American Payroll Association and/or Independent Payroll Providers Association for their assessment.