Why Can Three Neighbors Owe Different Payroll Taxes?

Tomer London says three neighboring homes at the end of a United States cul-de-sac each have a different set of tax codes, so payroll has to know which side of the street an employee lives on to calculate taxes correctly.

Payroll in the United States runs across tens of thousands of localities. Some states base it on the county and some on the school district. A W-2 sometimes shows a couple of dollars for a city district, a school district, or a special interest district. Some localities are so small they have no big robust system. After the town committee passes a new resolution, a person in the office posts the update on the bulletin board and maybe in the local newspaper. A small business employing someone there remotely has no clear way to learn about the change.

People who have been in the industry for decades know the person to call. They ask about the kids and grandkids, then ask whether anything changed recently that a payroll processor should know. Gusto updates the software with the answer. The work goes beyond faxes to bulletin boards, and it saves the business owner the headache of figuring the rule out.