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Rogers: Legislation to address withholding taxes and protect employers passes Senate

STATEHOUSE (Feb. 6, 2020) – A bill authored by State Sen. Linda Rogers (R-Granger) to address state withholding taxes and protect employers recently passed out of the Senate by a vote of 48 to 1.

Senate Bill 320 would provide that the Indiana Department of Revenue (IDOR) shall only accept payment of employer withholding taxes that are made or withdrawn directly from the employer’s bank account.

Rogers authored this bill in response to cases where payroll providers used the employers’ funds inappropriately, and when the payment to the IDOR came due, the payroll provider no longer had funds to honor that liability. When that happens, the employer still has an unpaid liability and is still responsible for paying those taxes. Essentially, employers are then forced to pay those taxes twice.

By changing the way withholding taxes are distributed, SB 320 would allow for more control and offer greater assurance to the employer that funds collected will be appropriately allocated.

“Many businesses utilize independent firms to process their payroll and submit their employer taxes to the government,” Rogers said. “Unfortunately, our community was hit hard when a major payroll processing firm allegedly misappropriated their clients’ funds and left their taxes unpaid, forcing law-abiding businesses to essentially pay their taxes twice. SB 320 would prevent this situation from happening again.”

SB 320 was amended to allow a business to sign a waiver to allow its payroll taxes to go through a payroll provider. This waiver would have three requirements:

  • The employer would need to acknowledge they are still liable to pay taxes if the payroll provider fails to do so;
  • The payroll provider would need to pay the funds shortly after withdrawing them from a businesses’ account — typically around three days; and
  • The waiver would be a separate document and not written into a contract or agreement.

SB 320 will now move to the House of Representatives for further consideration.


For high-resolution photos of Rogers, click here.