ADP CEO on Processing the Payroll Tax
Carlos Rodriguez, Automatic Data Processing CEO, discusses how his company was able to handle the expiration of the payroll tax cut.
Not all American workers have seen the higher payroll tax in their paycheck yet, particularly those employed by small businesses, Carlos Rodriguez, CEO of Automatic Data Processing, the largest US payroll processor, told CNBC Tuesday.
That's because the Internal Revenue Service deadline for the increase, which took effect Jan. 1, is still a month away, and it may take smaller companies that long to make the updates.
"February 15th is the official deadline the IRS has for people to make the changes," Rodriguez said on "Squawk Box." "But all of our systems were updated. Every company we process for has the right tax tables."
The payroll tax, which funds Social Security, was raised back to its 2010 level of 6.2 percent as part of the "Fiscal Cliff" deal. The higher tax is already being blamed for slowing consumer spending and has cut some estimates for economic growth this year.
(Read More: Payroll Tax Hike Will Affect Your Paycheck and the Economy)
ADP processes paychecks for 1 in 6 American workers ? 24 million of them. Eighty percent of Fortune 500 companies are clients of ADP and more than 90 percent of the Fortune 100.
"Small businesses typically use desktop software and that is probably going to take a little longer for them to update," Rodriguez said.
As for how much the payroll tax increase will cost average workers, a single person making $60,000 a year will see about $40 less per bi-weekly paycheck.
(Read More: Think Only the Rich Will Pay More Taxes? You're Wrong)
Some people may look to offset that cost. "Making adjustments to their withholdings. They're doing a lot of things to offset the decrease they may be seeing," Rodriguez said, but adding that seeking professional tax advice on these type of moves is recommended. "You don't want to have a nasty surprise next April as a result of owing more."
(Read More: 5 Ways to Counter the Impact of the Payroll Tax Hike)
?By CNBC's Matthew J. Belvedere; Follow him on Twitter @Matt_SquawkCNBC
Not all American workers have seen the higher payroll tax in their paycheck yet, particularly those employed by small businesses, Carlos Rodriguez, CEO of Automatic Data Processing, the largest US payroll processor, told CNBC Tuesday.
Source: http://www.cnbc.com/id/100381019
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