Payroll Glossary - S

Safe-harbor: An IRS-approved alternative method for complying with IRS rules, regulations, and procedures (e.g., per diem allowances and high-low substantiation).

Salary Reduction Arrangement: See Cash or Deferred Arrangement..

Savings Incentive Match Plans for Employees of Small Employers (SIMPLE Plans): Retirement plans for employees of small employers (no more than 100 employees) that have simpler administrative and nondiscrimination requirements than other retirement plans.

SCA: Service Center Advice.

SDI: State Disability Insurance.

SDU: State Disbursement Unit.

SECA: Self-Employment Contributions Act.

Segregation of Duties: A basic principle of internal control that prevents individuals from having responsibility for all phases of a job process, thus guarding against misuse or misappropriation of company assets.

Self-Employment Contributions Act (SECA): This law requires self-employed individuals to pay both the employer and employee share of social security and Medicare taxes.

SEP: Simplified Employee Pension.

Service Center Advice (SCA): An opinion on a point of tax law as applied to a specific set of facts provided to an IRS service center from the IRS Chief Counsel's ofice.

Severance Pay: A payment offered by some employers to terminated employees (usually those who are terminated through no fault of their own) that is designed to tide them over until new employment is secured.

Shared Services: The consolidation of related functions and integration of the processes involved with them throughout an entire organization.

Shift Differential: Extra pay received by employees for working a less-than-desirable shift (e.g., evenings or late nights).

Short-Term Assignment: A job assignment that is realistically expected to and in fact does last less than 12 months.

SIMPLE Plans: Savings Incentive Match Plans for Employees of Small Employers.

Simplified Employee Pension (SEP): An Individual Retirement Arrangement (IRA) with special participation requirements that is available to certain small employers.

SIT: State Income Tax.

Social Security: The Old Age, Survivors, and Disability Insurance (OASDI) component of FICA.

Social Security Administration (SSA): The federal government agency that administers social security.

Social Security Number (SSN): An individual's taxpayer identification number, it consists of nine digits (000-00-0000).

Social Security Statement: The earnings and benefit verification statement sent by the Social Security Administration annually to employees over age 24 in the United States who are not currently receiving social security benefits.

Special Accounting Rule: A safe-harbor rule that allows employers to treat certain noncash fringe benefits provided to employees in November or December as received in the following year. If an employer uses the special accounting rule, the employee must also report the benefit for the same period.

Special Wage Payments: Payments made to employees or former employees for services performed in an earlier year. These payments require special reporting by employers so that retirees. social security benefits are not reduced under the annual earnings test because of amounts earned in prior years.

Split-dollar Life Insurance: An arrangement where an employer pays that part of an annual life insurance premium representing the increase in the cash surrender value of the policy during the year, while the employee pays the remainder of the premium.

Split Shifts: A workday that is divided into two parts separated by a spread of hours longer than the con- ventional rest or meal period.

SSA: Social Security Administration.

SSN: Social security number.

State Disbursement Unit (SDU): A centralized location for the collection and disbursement of withheld child support payments throughout a state.

Statute of Limitations: A period of time established by law during which parties can take legal action to enforce their rights.

Statutory Employees: Special groups of employees identified by law (e.g., full-time life insurance salespeople, certain homeworkers) whose wages are not subject to FITW, but are subject to FICA and FUTA.

Statutory Nonemployees: Special groups of workers who may qualify as common law employees but are treated under the law as independent contractors (e.g., qualified real estate agents and direct sellers) whose compensation is not subject to federal income tax withholding or employment taxes.

Statutory Stock Option: An Incentive Stock Option or an option exercised under an Employee Stock Purchase Plan.

Stored Value Card: A device that enables the cardholder to transfer the underlying funds (i.e., the funds received by the issuer of the card in exchange for the issuance or reloading of the card) to a merchant at the merchant’s point-of-sale terminal. (Definition courtesy of The Federal Reserve)

Straight Time: The standard number of work hours during a workweek for which an employee's regular rate of pay will be paid.

SUB: Supplemental Unemployment Benefits.

Substantiation: In the context of reimbursed employee business expenses, the requirement that employees keep records of the time, place, and business purpose of reimbursable expenses they incur, including receipts (also used to track business use of company-provided vehicles).

Substitute Forms: Tax forms that are printed by private printers rather than the Internal Revenue Service. They must meet certain specifications to be acceptable for filing.

SUI: State Unemployment Insurance.

Supper Money: The irregular and occasional payment of amounts to employees who work late to cover the cost of meals eaten during that extra working time.

Supplemental Unemployment Benefits (SUB): Employer plans that provide supplements to state unemployment compensation benefits.

Supplemental Wages: Compensation received by employees other than their regular pay, such as bonuses, commissions, and severance pay. Income tax may be withheld from such payments at a flat rate under certain circumstances.