They may be considering commission pay as supplemental wages.

"7. Supplemental Wages

Supplemental wages are compensation paid in addition to an employee's regular wages. They include, but are not limited to, bonuses, commissions, overtime pay, payments for accumulated sick leave, severance pay, awards, prizes, back pay and retroactive pay increases for current employees, and payments for nondeductible moving expenses. Other payments subject to the supplemental wage rules include taxable fringe benefits and expense allowances paid under a nonaccountable plan. How you withhold on supplemental wages depends on whether the supplemental payment is identified as a separate payment from regular wages."

Employers can elect to take 25% from supplemental wages (it used to be more before the recent tax cuts).

"Supplemental wages identified separately from regular wages. If you pay supplemental wages separately (or combine them in a single payment and specify the amount of each), the federal income tax withholding method depends partly on whether you withhold income tax from your employee's regular wages.

1.

If you withheld income tax from an employee's regular wages, you can use one of the following methods for the supplemental wages.
1.a. Withhold a flat 25% (no other percentage allowed).
1.b Add the supplemental and regular wages for the most recent payroll period this year. Then figure the income tax withholding as if the total was a single payment. Subtract the tax already withheld from the regular wages. Withhold the remaining tax from the supplemental wages.

2. If you did not withhold income tax from the employee's regular wages, use method 1-b above. This would occur, for example, when the value of the employee's withholding allowances claimed on Form W-4 is more than the wages.

Regardless of the method that you use to withhold income tax on supplemental wages, they are subject to social security, Medicare, and FUTA taxes. "

http://www.irs.gov/publications/p15/ar02.html#d0e1448

---

_______________________

Thanks very helpful- I supplied this info to my new payroll dept, I hope they can see the light!!

---

----------------------------------------------------------
I'm just a 10 cent rider on a $2,500.00 Bike