The Internal Revenue Service has issued instructions to help employers deal with provisions of the newly approved federal tax package, which includes a 2 percent cut in payroll taxes for U.S. workers.

Called Notice 136, the instructions include new withholding tables that employers will use in 2011 to calculate the income and Social Security taxes that should be deducted from workers' paychecks.

The Social Security tax was reduced from 6.2 percent to 4.2 percent of wages paid as part of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act, signed into law on Friday by President Barack Obama. The act also held income-tax rates at current levels.

"The IRS recognizes the late enactment of these changes makes it difficult for many employers to quickly update their withholding systems," IRS spokesman Bill Brunson said in a news release.

Publication of Notice 136, along with an Employers' Tax Guide (Publication 15, Circular E), is the agency's effort to help companies make adjustments quickly so that workers can receive the additional take-home pay as soon as possible.

Political leaders are looking to the reduced taxes to stimulate spending, lifting the economy out of the lingering doldrums of the Great Recession, which officially lasted from December 2007 until June 2009.

The IRS is asking employers to make the changes as soon as possible — no later than Jan. 31 for payroll taxes and no later than March 31 for Social Security withholdings.

As the first sizable adjustment to the withholding tables since 2003, the changes will impact companies of all sizes. But they shouldn't be insurmountable, said Kimberly Barton, a human-resources adviser for The Employers Council.

The Salt Lake City-based organization provides management-resource assistance to 550 firms. Its next weekly newsletter, to be released Monday, will include material summarizing Utah and federal payroll and wage rules "so employers are up to date," Barton said.

"Larger companies, obviously, will have an easier time than smaller employers, who have one individual closing out the year-end [books] and filing all of the required forms with the IRS," Barton said. "For those who don't use payroll services, it [the instructions] will help."

Although Barton didn't want to assess whether the Social Security cut will boost taxpayers' income and spending, she said, "Employers are happy to pass that on to their employees and to make sure they have that additional income. For someone making $50,000 a year, that's an additional $1,000."

IRS spokesman Brunson said employees don't have to fill out a new W-4 withholding form to obtain the benefits.

But the agency encourages workers to review their withholding positions annually because lifestyle changes — working multiple jobs, getting married or divorced, buying a home — can change what works best for them.

Brunson noted that another form, Publication 919, "How Do I Adjust My Tax Withholding?" is also available.

All the other materials can be found on the IRS website, www.irs.gov.

mikeg@sltrib.com —

Payroll guide

O The Internal Revenue Service website, www.irs.gov, has a new withholding guide to help employers reduce the amount of money taken out of workers' paychecks to cover Social Security taxes.