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

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

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

Employers who contract out some or all their payroll responsibilities should consider the following:

- The company is ultimately accountable for the deposit and payment of federal tax liabilities. Although the employer might forward the tax totals up to the third-party to make the tax deposits, the employer is the accountable celebration. If the third-party stops working to make the federal tax payments, then the IRS might examine charges and interest on the company's account. The company is accountable for all taxes, penalties and interest due. The company might also be held personally responsible for specific unsettled federal taxes.
- If there are any issues with an account, then the IRS will send correspondence to the employer 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 might significantly restrict the company's capability to be notified of tax matters involving their service.
- Electronic Funds Transfer (EFT) must be utilized to deposit all federal tax deposits. Generally, an EFT is made using Electronic Federal Tax Payment System (EFTPS). Employers need to guarantee their payroll providers are utilizing EFTPS, so the employers can validate 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 occasionally confirm payments. A red flag should increase the very first time a service provider 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 allows employers to make any extra tax payments that their third-party company is not making on their behalf such as estimated tax payments. There have been prosecutions of people and companies, who acting under the look of a payroll service company, have actually taken funds planned for payment of work taxes.

EFTPS is a safe, precise, and simple to utilize service that offers an immediate verification for each deal. This service is offered free of charge from the U.S. Department of Treasury and enables companies to make and verify federal tax payments digitally 24 hr a day, 7 days a week through the internet or by phone. For more details, can register online at EFTPS.gov or call EFTPS Customer support at 800-555-4477 for a registration type or to speak with a customer support representative.

Remember, companies are ultimately accountable for the payment of income tax kept and of both the employer and staff member parts of social security and Medicare taxes.

Employers who think that an expense or notice received is a result of a problem with their payroll company should contact the IRS as quickly as possible by calling the number on the costs, composing to the IRS workplace that sent the costs, calling 800-829-4933 or going to a regional IRS office. For more info about IRS notifications, bills and payment options, describe Publication 594, The IRS Collection Process PDF.