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New Revenue Procedure Allows for Earlier Accrual of Payroll Taxes

The IRS had argued that payroll taxes were deductible when the related compensation was paid. Consequently, year-end wages and bonuses that were fixed and determinable at year-end, could be deductible when accrued but the related payroll taxes were deductible in the subsequent year when paid. Revenue Procedure 2008-25 allows certain taxpayers the ability to accrue and deduct the related payroll taxes in the earlier year. Taxpayers must apply for this change in method of accounting by filing a Form 3115 if they have not previously deducted these related payroll taxes.

For more information, contact Mike Calahan at 312-980-2996 or your Blackman Kallick representative.

This publication is part of Blackman Kallick’s marketing of professional services, and is not written tax advice directed at the specific facts and circumstances of any person and/or entity. Contents of this publication are of a general nature, and you should not act on this information without obtaining professional advice from your business advisor that is appropriately tailored to your individual needs and circumstances. This written advice is not intended or written to be used, and cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.