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

Many companies contract out some or all their payroll and associated tax responsibilities to third-party payroll company. Third-party payroll company can enhance organization operations and help satisfy filing due dates and deposit requirements. A few of the services they provide are:

- Administering payroll and work taxes on behalf of the employer where the employer supplies the funds at first to the third-party.
- Reporting, gathering and transferring work taxes with state and federal authorities.

Employers who contract out some or all their payroll obligations must think about the following:

- The company is eventually responsible for the deposit and payment of federal tax liabilities. Although the company might forward the tax totals up to the third-party to make the tax deposits, the employer is the responsible celebration. If the third-party stops working to make the federal tax payments, then the IRS may evaluate penalties and interest on the company's account. The employer is accountable for all taxes, and interest due. The company might likewise be held personally accountable for specific unsettled federal taxes.
- If there are any problems with an account, then the IRS will send out correspondence to the company at the address of record. The IRS strongly recommends that the company does not change their address of record to that of the payroll provider as it might significantly restrict the employer's capability to be notified of tax matters involving their organization.
- Electronic Funds Transfer (EFT) need to be used to transfer all federal tax deposits. Generally, an EFT is used Electronic Federal Tax Payment System (EFTPS). Employers should guarantee their payroll companies are utilizing EFTPS, so the employers can validate that payments are being made on their behalf. Employers should sign up on the EFTPS system to get their own PIN and utilize this PIN to regularly verify payments. A red flag should increase the very first time a service provider 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 enables companies to make any additional tax payments that their third-party supplier is not making on their behalf such as approximated tax payments. There have been prosecutions of individuals and companies, who acting under the look of a payroll service company, have actually taken funds intended for payment of work taxes.

EFTPS is a safe and secure, precise, and simple to use service that provides an immediate verification for each transaction. This service is provided totally free of charge from the U.S. Department of Treasury and permits employers to make and confirm federal tax payments digitally 24 hours a day, 7 days a week through the internet or by phone. To learn more, employers can register online at EFTPS.gov or call EFTPS Customer support at 800-555-4477 for an enrollment kind or to consult with a client service agent.

Remember, employers are eventually accountable for the payment of earnings tax kept and of both the employer and employee parts of social security and Medicare taxes.

Employers who think that an expense or notice gotten is an outcome of a problem with their payroll service provider ought to get in touch with the IRS as quickly as possible by calling the number on the expense, composing to the IRS workplace that sent the costs, calling 800-829-4933 or visiting a local IRS workplace. To find out more about IRS notices, bills and payment choices, refer to Publication 594, The IRS Collection Process PDF.