Outsourcing payroll duties can be a sound business practice, but ... Know your tax responsibilities as a company

Many employers contract out some or all their payroll and associated tax tasks to third-party payroll service companies. Third-party payroll service suppliers can enhance company operations and assist satisfy filing due dates and deposit requirements. Some of the services they provide are:

- Administering payroll and employment taxes on behalf of the company where the company offers the funds at first to the third-party.
- Reporting, gathering and depositing work taxes with state and federal authorities.

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

- The employer is ultimately accountable for the deposit and payment of federal tax liabilities. Despite the fact that the employer may forward the tax totals up to the third-party to make the tax deposits, the company is the responsible celebration. If the third-party stops working to make the federal tax payments, then the IRS might assess charges and interest on the company's account. The company is responsible for all taxes, charges and interest due. The employer might also be held personally accountable for specific overdue 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 suggests that the employer does not change their address of record to that of the payroll company as it may substantially limit the employer's capability to be notified of tax matters involving their service.
- Electronic Funds Transfer (EFT) need to be used to deposit all federal tax deposits. Generally, an EFT is made using Electronic Federal Tax Payment System (EFTPS). Employers need to ensure their payroll companies are using EFTPS, so the employers can confirm that payments are being made on their behalf. Employers must register on the EFTPS system to get their own PIN and use this PIN to regularly confirm payments. A warning must increase the very first time a service company misses out on a payment or makes a late payment. When an employer signs up on EFTPS they will have on-line access to their payment history for 16 months. In addition, EFTPS permits companies to make any additional tax payments that their third-party company is not making on their behalf such as estimated tax payments. There have actually been prosecutions of individuals and companies, who acting under the look of a payroll provider, have actually stolen funds meant for payment of work taxes.

EFTPS is a secure, accurate, and simple to use service that supplies an immediate verification for each deal. This service is offered complimentary of charge from the U.S. Department of Treasury and enables employers to make and verify federal tax payments digitally 24 hours a day, 7 days a week through the internet or by phone. For additional information, employers can enroll online at EFTPS.gov or call EFTPS Client service at 800-555-4477 for an enrollment type or to talk with a client service representative.

Remember, employers are eventually accountable 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 an expense or notification received is an outcome of an issue with their payroll company must get in touch with the IRS as soon as possible by calling the number on the bill, composing to the IRS office that sent the expense, calling 800-829-4933 or checking out a regional IRS office. For more information about IRS notifications, expenses and payment options, refer to Publication 594, The IRS Collection Process PDF.