A Road, Not a Journey: Navigating Tax Compliance in 2025

5:20

17 December

Posted at 08:00h in by noticeninja

On -Demand Webinar Highlights

Tax compliance is not just a goal—it’s a continuous process that demands careful planning, collaboration, and innovation. In our recent webinar, A Road, Not a Journey: Tax Compliance in 2025, we explored the evolving challenges of payroll tax compliance and how organizations can stay ahead with KMPG Tax Managing Director, Mindy Mayo and Notice Ninja Chief Product Officer and Co-founder, Rick Pinkerman.

For those who missed the session, this blog highlights the key insights, actionable strategies, and tips shared during the webinar. Plus, you'll be able to download the Payroll Tax Compliance Worksheet for practical steps to streamline your compliance efforts and check your team's readiness.

Building Robust Year-End Work Plans

Why Work Plans Matter:

Year-end work plans are crucial for ensuring all payroll processes are completed accurately and on time. Using resources like the American Payroll Association’s templates, businesses can:

Assign responsibilities across departments with clear due dates.
Document unreported items such as gift cards and relocation expenses.
Coordinate with stakeholders to produce accurate W2 forms.

Collaboration Across Departments:

A central theme was the necessity of departmental collaboration. For instance:

HR, payroll, and accounts payable teams must align on COBRA expenses and fringe benefits.
IT involvement is critical for managing rate changes in payroll systems.

Navigating Remote Work and Jurisdictional Compliance

Challenges of Remote and Hybrid Models:

The shift to remote and hybrid work has introduced jurisdictional complexities. Employers need to:

Consult with tax departments before registering in new states.
Track employee work locations with reliable systems to ensure accurate withholdings.

Compliance with Multi-State Tax Rules:

Multi-state tax reporting remains a major hurdle for payroll managers. States' varying de minimis rules for tax withholding require detailed reconciliation, especially for international employees.

Employee Location Tracking:

Accurate tracking of employee locations is essential to avoid audit triggers. Activities like traveling for office restocking can lead to compliance issues if not properly documented.

Managing Compliance Notifications and State-Level Penalties

The Importance of Notices:

Ignoring compliance notifications can lead to compounded issues over time. Speakers emphasized the need for:

Developing workflows to handle multi-layered notifications related to corporate filings.
Tracking state-level notices to mitigate penalties effectively.

Role of Vendors:

As notices grow more complex, many organizations are involving vendors like NOTICENINJA to manage and resolve compliance issues efficiently.

"Automation is no longer a luxury; it's a necessity. Organizations need scalable systems to handle increasing volumes of compliance requirements."

Mindy Mayo, KMPG

Compensation, Benefits, and Tax Implications

Fringe Benefits and Gifts:

Employers must ensure fringe benefits are properly documented and compliant with accountable plan rules. The session highlighted:

The taxable nature of cash or cash-equivalent gifts.
Monitoring employee expense reports to prevent misreporting.

Home Office Expenses:

With many employees working from home, organizations must comply with reimbursement obligations for home office arrangements, ensuring proper business registrations for tax purposes.

Preparing for Legislative Changes

Expiration of the Tax Cuts and Jobs Act:

The Tax Cuts and Jobs Act, set to expire in December 2025, will significantly impact payroll systems and W-4 forms. Organizations should proactively:

Audit current systems for compliance readiness.
Engage stakeholders to adapt to legislative changes.

Increasing Notifications in 2024:

The webinar noted an expected rise in compliance notifications, particularly due to mergers, acquisitions, and account closures.

Proactive Approaches to Compliance

Avoiding Audit Triggers:

Frequent travel or multi-state work increases exposure to audits. States like New York, known for aggressive enforcement, require special attention for non-resident tax withholding and unemployment insurance reporting.

Middleware Solutions:

To stay ahead of changes, businesses should explore middleware tools for managing tax rate adjustments and simplifying multi-state tax reporting.

How to Stay Ahead in Payroll Tax Compliance

Navigating payroll tax compliance requires a proactive approach to planning, collaboration, and technology. The webinar provided actionable insights to help businesses streamline their processes and avoid costly errors.

By leveraging robust year-end work plans, collaborating across departments, and adopting automation tools like NOTICENINJA, your organization can adapt to evolving compliance challenges, including multi-state operations, remote work, and legislative changes.

For a detailed walkthrough of these strategies, watch the webinar on-demand and get access to the Payroll Tax Compliance Worksheet—a practical resource for tackling compliance challenges.