| WASHINGTON/NEW YORK
WASHINGTON/NEW YORK Dec 21 At payroll
processing businesses across the United States, the "fiscal
cliff" stalemate in Washington means uncertainty over
tax-withholding tables just days before the start of 2013.
The U.S. Internal Revenue Service still has not issued the
tables for next year that show how much money employers should
hold back from workers' paychecks to cover federal income taxes.
Payroll processors need the tables to get their systems
geared up for the new year. The tables are set by many factors,
including tax rates and annual inflation adjustments.
In anticipation of late-breaking developments, Rochester,
New York-based Paychex Inc will be serving Buffalo
chicken wings for staffers working late on New Year's Eve, said
Frank Fiorille, an executive at the payroll processing giant.
"Our systems are flexible enough that we can wait almost up
until the last minute and still make changes," he said.
The IRS appreciates of the impact of Congress' inaction.
"Since Congress is still considering changes to the tax law,
we continue to closely monitor the situation," IRS spokesman
Terry Lemons said in a statement. "We intend to issue guidance
by the end of the year on appropriate withholding for 2013."
Tax rates are slated to rise sharply for most Americans if
Congress and President Barack Obama fail to reach an agreement
that averts the "fiscal cliff" approaching at year-end.
"The political process will determine one way or the other
what" the IRS must do, said Scott Hodge, president of the Tax
Foundation, a business-oriented tax research group.
For now, he said, from the tax-collection agency's
viewpoint, "doing nothing is probably the best course." This
would be because withholding tables distributed now might only
have to be revised if Congress acts in the next few days.
Some payroll servicers are not waiting for formal IRS
guidance. The American Payroll Association, which represents
about 23,000 payroll professionals, told members on Friday to
rely on 2012 withholding tables until the IRS releases the new
forms for 2013.
The association said its decision was based on a statement
earlier this month from an IRS official.
The agency would not confirm that policy on Friday.
Tax preparer H&R Block Inc said it will use 2012
tax-withholding tables if the 2013 tables are not issued.
Executives said they were frustrated with the uncertainty in
Washington, but were doing their best to cope.
"We are not doctors or surgeons and this is not life
threatening," said Rob Basso with Advantaged Payroll Services,
an Auburn, Maine-based payroll processor that serves 30,000
businesses. "It is annoying and disruptive to people's lives,
but we will get through it."