Communicating Payroll to Leadership Entails Research, Prep

Effectively communicating payroll tax issues to executive leadership requires thorough tax research beforehand and an efficient presentation, two payroll experts said May 14.

Tax law is codified in the Internal Revenue Code, but payroll professionals should review associated regulations as well, said Barbara Youngman, CPP, payroll technology manager for Toyota Motor North America. The Code of Federal Regulations provides a detailed explanation and interpretation of the IRC provisions, she said. They are easier to understand than the IRC and are the most authoritative form of IRS guidance available, she said.

The IRS also publishes revenue rulings and revenue procedures, she said. Revenue rulings serve as official interpretations of the IRC in the form of public administrative decisions, while revenue procedures are official statements issued by the IRS, Youngman said.

Payroll professionals can refer to revenue rulings when determining how to handle certain situations like mergers and acquisitions, since they set a precedent for all taxpayers, added Martin Armstrong, CPP, vice president of payroll shared services for Charter Communications. Revenue Ruling 62-60, for example, states that a business created through the merger of two separate businesses is considered the same employer for tax purposes, and employees would only receive one Form W-2, Wage and Tax Statement, for the year, he explained.

Referencing these forms of IRS guidance, as well as IRS notices and announcements, can help payroll professionals justify their actions to leadership and the IRS, he added.

“You may not really care about this much now, but you will when you get a subpoena or need to defend yourself,” he said. “And if nothing else, you need to make sure your systems are set up perfectly for taxation [purposes].”

The IRS has an electronic newsletter for payroll professionals to help them stay up to date on the latest guidance and announcements, Youngman said. Third-party services like PayrollOrg and Bloomberg Tax can also assist in finding relevant IRS regulations, guidance, and decisions, Armstrong added.

Armstrong and Youngman spoke at PayrollOrg’s 44th Payroll Congress in Nashville, Tennessee. Both serve on Bloomberg Tax’s Payroll Advisory Board.

When explaining the intricacies of payroll tax to executive leadership, an effective communication strategy is just as important as the tax research, Youngman said.

“If you have a payroll processor and they can’t explain that process to you, then they don’t understand that process,” she said. “You’re not going to be able to explain it to your executives or compensation teams if you don’t fully understand the situation.”

Payroll professionals should create concise presentations that use stories, charts, and diagrams to simplify complex technical concepts, she said. Most executives do not understand payroll, so payroll professionals should should avoid using acronyms or tax jargon whenever possible, she added.

Presentations should include possible options to address the issue, steps already taken to remedy the situation, and ways to prevent a similar problems in the future, she said. Payroll teams should work with their company stakeholders, including human resources and finance, to find possible solutions, she added.

“I’ve been going through a tax issue for over a year now,” Youngman said. “I had to go talk to treasury, tax, finance, and all the other stakeholders because I couldn’t tell the story if I didn’t know what everybody’s role was.”

These same tips apply even if a company’s payroll team is educating leadership on new laws, such as the One Big Beautiful Bill Act, Armstrong said. Payroll professionals should provide context and explain how new laws and regulations will impact the business, he said.

“Trump accounts are another communication opportunity that we are all going to have if your company is going to be doing contributions,” he said. “Try to explain it simply and easily. Framing the message is key.”