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Eternum
01-17-2012, 09:30 AM
Hi folks,

I received a request to fill out some information for auditor of my insurance company. In particular they ask about "Policy Period Gross Payroll". My question is: Do I need to use "gross" from employer standpoint, which includes employer's portion of SS and Medicare tax or from employee standpoint, in which case those two are excluded?

I asked auditor and their response was "from employer standpoint". However the friend of mine told me they had couple of audits in the past and auditors were interested in employee gross payments, i.e. without employer's portion of SS and Medicare tax.

If anyone has comments, please chime in. Thanks!

Business Attorney
01-18-2012, 12:36 AM
Normally, gross payroll is the payroll paid to your workers before any deductions, such as the employee's share of FICA and the employee's contributions to a 401(k) or other salary deduction plan or benefit plans. Gross payroll would also include overtime, commissions and any other form of compensation from the employer

It would not include the employer's share of payroll taxes or the employer's contributions to benefit plans, even though you might lump those together under "Payroll Expense" for internal accounting purposes.

Of course, any particular insurance company might have a contractual definition of gross payroll that differs from the norm, so only your insurance company can tell you for sure.

I'm curious why a general liability insurance policy would be interested in gross payroll. That is something that normally comes up in a workers compensation insurance audit.

Eternum
01-18-2012, 02:50 PM
Sorry, you are right that was definitely Workers Compensation insurance. What in the world I was thinking about while typing? Looks like I can not change thread title though.

Anyway, appreciate your inputs.