Normally, by now (middle of November) the IRS releases the new payroll withholding charts for the following year (2011).  But Congress is not even close to agreeing on the tax rate structure for 2011.  Here is a synopsis:  Elections held November 2; large turnover in party and Congressional members; first week is wasted on orientation and setting up leadership positions for new members; then they are off for Thanksgiving; that brings us to December.  First they have to finalize rules for 2009 such as AMT exemptions, college tuition deductions, and sales tax deductions, and then tackle 2011 tax rates.  So the treasury may be forced to issue payroll tax withholding tables based on higher tax rates (expired Bush tax cuts rates) which means less net pay for everyone.

The practical problem for payroll service bureaus and other tax professionals is that it takes time to reprogram software and code changes in tax law into their systems.  So tax law changes that give very little time to implement or are retroactive will reap havoc on these providers who are trying to assist the general business community to be compliant with current tax laws.  Digit will be working overtime in December and January to make sure our clients tax calculations are current with recent tax legislature.