Written by Marc R Barnes EA
February 12, 2013

Summary of Information Required by Major Federal Payroll Laws

Recordkeeping Requirements
The major federal payroll tax laws do impose recordkeeping requirements on employers, but no specific form of record is mandated. The table below lists the specific information needed and the retention time periods required.

Summary of Information Required by Major Federal Payroll Laws

Item Fair Labor Standards Act Social Security Income Tax Withholding Unemployment Tax
EMPLOEE DATA Name Yes Yes Yes Yes
Address Yes Yes Yes Yes
Gender Yes
Date of Birth Yes
Social Security Number Yes Yes Yes Yes
Withholding allowances Claimed Yes
Occupation Yes Yes Yes Yes
Period Employed Yes Yes Yes
State Where Services Rendered Yes Yes
EMPLOYMENT DATA Beginning and Ending Date of Employee's Employment Yes Yes
Day and Time of Day When Workweek Begins Yes
Regular Hourly Rate of Pay Yes
Basis of Wage Payments; e.g., $9.25 per hour; $74.00 Per Day Yes
Hours Worked Each Day Yes
Hours Worked Each Week Yes
Daily of Weekly Straight-time pay, Exclusive of Overtime Pay Yes
Amount and Nature of Exempt Pay Yes
Weekly Overtime Pay Yes
Total Additions to or Deductions from Wages Yes
Total Remuneration for Payroll Period Yes Yes Yes
Total Remuneration for Calendar Year Yes Yes
Date of Payment Yes Yes Yes Yes
Payroll Period Yes Yes Yes Yes
TAX DATA Employees' Wages subject to Tax for Payroll Period Yes Yes
Employee's Wages Subject to Tax for Calendar Year Yes Yes
Taxable Remuneration-if different from Total Remuneration, Reason for Difference Yes Yes Yes
Tax Deductions from Employee's Wages Yes Yes Yes
Date Tax Collected if Other than Date of Payment Yes Yes
Tax Paid by Employer but not Deducted from Employee's Wages Yes Yes Yes
GEN'L Specific Form of Records No No No No
Number of Years Records Must Be Kept 2-3 4* 4* 4*
*Four years after the due date of the payment of the tax to which the records relate.

Fair Labor Standards Act
The Fair Labor Standards Act (FLSA), referred to as the Federal Wage and Hour Law, addresses:

  • Minimum wage ($7.25 per hour) and overtime pay requirements. In addition, equal pay for equal work, employment of child labor, public service contracts, and wage garnishment.
  • Coverage of employers engaged in interstate commerce or in production of goods and services for interstate commerce.
  • Maintaining records that explain the basis of wage differentials paid to employees of opposite sex for equal work.
  • Displaying a poster (from the regional office of the Wage and Hour division) informing employees of the provisions of the law.
  • States' Minimum Wage and Maximum Hour Laws that also establish minimum wage rates for covered employees. Where both federal and state laws cover the same employee, the higher of two rates prevails (e.g., Arizona $7.90 per hour).
  • The State's wage orders that also can affect pay periods, pay for call-in and waiting times, rest and meal periods, absences, meals and lodging, uniforms, etc.

Federal Insurance Contributions Act
The Federal Insurance Contributions Act (FICA), referred to as Social Security, addresses:

  • Tax on employees (set percent of their gross wages) and employers for the Federal Old-Age and Survivors' Trust Fund and the Federal Disability Insurance Trust Fund.
  • Separate tax on employees and employers to finance the Health Insurance Plan Medicare.
  • Tax on net earnings of the self-employed individual (Self-Employment Contributions Act SECA).
  • Making payments to persons who are entitled to benefits under these social security taxes.

Income Tax Withholding Laws
Federal income tax withholding laws address:

  • Income tax that is levied on the earnings of most employees and is deducted from their gross pay.
  • Income taxes that can be imposed by federal, state, and local governments.
  • Federal Income Tax (FIT) that employs a percentage formula used by each employer to withhold a specified amount from each wage payment.
  • State tax rates that vary from state to state.

Unemployment Tax Acts
Unemployment tax laws address:

  • Tax levied on employers (Federal Unemployment Tax Act FUTA) that is used to pay state and federal administrative expenses of the unemployment program.
  • A credit granted against most of the FUTA tax if the employer pays a state unemployment tax. A smaller credit is granted to states that have not paid back borrowings from the federal government which were used to pay the cost of benefits to their eligible unemployed workers.
  • State unemployment taxes (SUTA) on employers imposed by all states. These taxes are used to pay unemployment benefits.
  • Standards set by the Social Security Act that result in a high degree of uniformity in the requirements of state unemployment laws.
  • Employers' need to be aware of the SUTA laws in the states where they operate.

Copper Canyon Tax and Accounting Services provides bookkeeping, payroll and income tax preparation in Tucson and Southern Arizona.