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

Many companies outsource some or all their payroll and related tax responsibilities to third-party payroll service companies. Third-party payroll company can enhance business operations and help fulfill filing deadlines and deposit requirements. A few of the services they offer are:

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

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

- The company is eventually responsible for the deposit and payment of federal tax liabilities. Despite the fact that the company may forward the tax amounts 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 may assess charges and interest on the company's account. The company is liable for all taxes, charges and interest due. The company may also be held personally accountable for certain overdue federal taxes.
- If there are any problems with an account, then the IRS will send out correspondence to the employer 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 significantly restrict the employer's capability to be notified of tax matters including their organization.
- Electronic Funds Transfer (EFT) should be utilized to deposit all federal tax deposits. Generally, an EFT is made utilizing Electronic Federal Tax Payment System (EFTPS). Employers should guarantee their payroll providers are using EFTPS, so the companies can confirm that payments are being made on their behalf. Employers need to sign up on the EFTPS system to get their own PIN and utilize this PIN to regularly validate payments. A warning needs to go up the first time a company misses out on a payment or makes a late payment. When an employer registers 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 service provider is not making on their behalf such as approximated tax payments. There have been prosecutions of people and companies, who acting under the appearance of a payroll service company, have actually stolen funds intended for payment of work taxes.

EFTPS is a secure, precise, and simple to utilize service that supplies an immediate confirmation for each transaction. This service is provided totally free of charge from the U.S. Department of Treasury and permits 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 info, employers can enlist online at EFTPS.gov or call EFTPS Customer Service at 800-555-4477 for an enrollment kind or to speak with a client service representative.

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

Employers who think that an expense or notification received is an outcome of a problem with their payroll service supplier ought to contact the IRS as quickly as possible by calling the number on the bill, composing to the IRS office that sent out the costs, calling 800-829-4933 or checking out a local IRS workplace. To find out more about IRS notifications, expenses and payment options, refer to Publication 594, The Process PDF.