Outsourcing payroll responsibilities can be a sound organization practice, but ... Know your tax responsibilities as an employer

Many companies outsource some or all their payroll and related tax duties to third-party payroll company. Third-party payroll company can streamline business operations and assist satisfy filing due dates and deposit requirements. A few of the services they offer are:

- Administering payroll and work taxes on behalf of the employer where the employer offers the funds initially to the third-party.
- Reporting, collecting and transferring employment taxes with state and federal authorities.

Employers who outsource some or all their payroll obligations should think about the following:

- The company is eventually accountable for the deposit and payment of federal tax liabilities. Even though the employer may forward the tax totals up to the third-party to make the tax deposits, the employer is the accountable party. If the third-party stops working to make the federal tax payments, then the IRS might assess charges and interest on the employer's account. The employer is accountable for all taxes, penalties and interest due. The employer may also be held personally accountable for particular unsettled federal taxes.
- If there are any concerns with an account, then the IRS will send correspondence to the company at the address of record. The IRS highly recommends that the employer does not change their address of record to that of the payroll provider as it may substantially limit the company's ability to be notified of tax matters involving their service.
- Electronic Funds Transfer (EFT) should be used to deposit all federal tax deposits. Generally, an EFT is made utilizing Electronic Federal Tax Payment System (EFTPS). Employers should guarantee their payroll service providers are using EFTPS, so the companies can verify that payments are being made on their behalf. Employers ought to register on the EFTPS system to get their own PIN and use this PIN to regularly verify payments. A red flag must go up the first time a company misses out on a payment or makes a late payment. When a company signs up on EFTPS they will have online access to their payment history for 16 months. In addition, EFTPS permits companies to make any extra tax payments that their third-party provider is not making on their behalf such as estimated tax payments. There have actually been prosecutions of people and companies, who acting under the look of a payroll provider, have actually stolen funds intended for payment of employment taxes.

EFTPS is a safe, accurate, and easy to use service that offers an immediate verification for each transaction. This service is offered complimentary of charge from the U.S. Department of Treasury and permits employers to make and validate federal tax payments electronically 24 hours a day, 7 days a week through the internet or by phone. For more info, companies can enroll online at EFTPS.gov or call EFTPS Customer support at 800-555-4477 for an enrollment kind or to consult with a customer support agent.

Remember, companies are ultimately responsible for the payment of earnings tax kept and of both the company and staff member portions of social security and Medicare taxes.

Employers who think that a bill or notification gotten is an outcome of an issue with their payroll service provider need to call the IRS as soon as possible by calling the number on the bill, composing to the IRS workplace that sent out the costs, calling 800-829-4933 or going to a local IRS office. To learn more about IRS notices, bills and payment choices, refer to Publication 594, The IRS Collection Process PDF.