AboutShirley McAllister, CPP, PHR Expertise I can answer payroll questions, payroll tax questions, 401K questions. No stock option questions please and I have some knowledge of other pensions but am most familiar with the 401K pension.
I can answer U.S.and Canada payroll questions proficiently and have a good general knowledge of UK and South Africa and some knowledge of Australia and New Zealand Payroll procedures.
Please do not ask me homework questions I do not have time to answer them.
Experience 25 years with an international company in the Human Resources, Payroll and Payroll Tax areas.
Organizations SHRM, APA, I.O.M.A.
Publications I.O.M.A. and BNA
Education/Credentials P.H.R., C.P.P., Canadian Payroll Administrator, Successfully passed APA class on UK Payroll Administration.
Boise State University Human Resource Certification
Awards and Honors APA Hotline Citation of Merit for last 8 years.
Question I understand that each state has different rules on whether they allow a common paymaster. I need to know what the policy is in the District of Columbia and am having trouble finding out. Any suggestions on where I can go?
Answer Common paymaster rules are under the IRS federal statutes Treasury Regulations, Subchapter AC, Sec. 31.3121(s)-1
Common paymaster status has no application to the withholding of federal, state or local income taxes. Common Paymaster is when two or more related corporations have the same employee working for them but they pay the employee from only one of the corporations as a common paymaster. When this is done the social security and Medicare taxes as well as the Futa taxes are determined as if the employees had one employer-the common paymaster-paying all their wages.
To qualify as a related corporation the following tests must be met:
A) They must be part of a "controlled group of corporations" under IRC 1563, which generally means one of the corporations must own at least 50% of the other's stock or the same five or fewer persons own at least 50% of the stock of each corporation.
B) Where a corporation does not issue stock, either 50% or more of the members of one corporation corporation's board of directors are on the other corporation's board of directors or hold 50% or more of the voting power with respect to the other corporation.
C) At least 50% of a corporation's officers are concurrently officers of the other corporation: or
D) At least 30% of one corporation's employees are concurrently employed by the other corporation.
The Common Paymaster is a member of a group of related corporations that pays wages to employees working for two or more of the corporations. It is responsible for all payroll records, as well as withholding, depositing, and reporting, for the employees it pays. The common paymaster may pay the employees by cash or with one check or with separate checks drawn on each employer's account (no other pay medium can be used). Compensation in the form of property provided by the related corporations to an employee must be separately taxed by each corporation.
The common paymaster provisions of sections 3121(s) and 3306(p) of the Code provide for certain related companies to use a single wage base for Federal Insurance contributions~ Act (FICA) and FUTA purposes for individuals employed by both companies. These provisions apply only where two or more related companies employ the same person and where only one of the companies pays the person. In this case, the company that pays the employee is referred to as the common paymaster. The common-paymaster is responsible for filing information and tax returns and issuing Forms W-2 with respect to wages it is considered to have paid. Employment Tax Regulations § 31.3121(s)-1(a). The definitions and other rules under the section 3121(s) regulations apply for purposes of section 3306(p) (FUTA) as well. There is no issue whether a common paymaster is permitted to file-Form 940 for the companies for which it is the common paymaster, because the regulations provide that the common paymaster is responsible for employment tax filings.
The common Paymaster is not the same as a Common Pay Agent
