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

Many companies outsource some or all their payroll and associated tax duties to third-party payroll provider. Third-party payroll service providers can improve company operations and help meet filing deadlines and deposit requirements. Some of the services they provide are:

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

Employers who outsource some or all their payroll duties should consider the following:

- The employer is ultimately accountable for the deposit and payment of federal tax liabilities. Despite the fact that the company may forward the tax totals up to the third-party to make the tax deposits, the employer is the accountable celebration. If the third-party fails to make the federal tax payments, then the IRS might assess charges and interest on the employer's account. The employer is responsible for all taxes, penalties and interest due. The employer may also be held personally accountable for certain unsettled federal taxes.
- If there are any problems with an account, then the IRS will send correspondence to the employer at the address of record. The IRS highly suggests that the employer does not alter their address of record to that of the payroll company as it might considerably limit the employer's ability to be notified of tax matters involving their business.
- Electronic Funds Transfer (EFT) must be utilized to transfer all federal tax deposits. Generally, an EFT is used Electronic Federal Tax Payment System (EFTPS). Employers need to guarantee their payroll companies are utilizing 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 utilize this PIN to periodically validate payments. A warning ought to increase the very first time a provider misses a payment or makes a late payment. When a company registers on EFTPS they will have on-line access to their payment history for 16 months. In addition, EFTPS allows companies to make any additional tax payments that their third-party service provider 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 provider, have actually taken funds planned for payment of work taxes.

EFTPS is a safe and secure, precise, and easy to use service that supplies an instant confirmation for each transaction. This service is offered totally free of charge from the U.S. Department of Treasury and permits employers to make and confirm federal tax payments digitally 24 hr a day, 7 days a week through the web or by phone. To find out more, companies can register online at EFTPS.gov or call EFTPS Customer care at 800-555-4477 for an enrollment form or to talk with a consumer service agent.

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

Employers who think that an expense or is an outcome of an issue with their payroll service provider need to call the IRS as quickly as possible by calling the number on the costs, writing to the IRS office that sent the expense, calling 800-829-4933 or checking out a local IRS workplace. For more details about IRS notifications, expenses and payment options, refer to Publication 594, The IRS Collection Process PDF.