Companies must have adequate systems and processes in place to comply with this tight turnaround time. However, there are a few more challenges companies should keep in mind:
Discrepancies. One challenge is mitigating discrepancies between the tax amount calculated and submitted to payroll and the amount payroll actually pays. During the reconciliation process, it’s often discovered amounts don’t match due to factors such as mobility taxation, which is an issue for tax reporting.
System Errors. It can be difficult to reconcile the reportable income and taxes withheld between the equity systems and the payroll system, particularly if a company is doing so at a large scale or if it needs to account for mobility tax.
Deadlines and Penalties. Correct, timely reporting and payments are critical. Missing the deadline or needing a W-2 correction comes with serious penalties, including fines.