Outsourcing payroll tasks can be a sound business practice, however ... Know your tax obligations as a company

Many companies outsource some or all their payroll and related tax tasks to third-party payroll service providers. Third-party payroll provider can simplify business operations and help fulfill filing deadlines and deposit requirements. Some of the services they offer are:

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

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

- The employer is ultimately responsible 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 company is the responsible celebration. If the third-party stops working to make the federal tax payments, then the IRS might evaluate penalties and interest on the employer's account. The employer is responsible for all taxes, charges and interest due. The employer might also be held personally responsible for particular unsettled federal taxes.
- If there are any issues 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 alter their address of record to that of the payroll service company as it might significantly limit the employer's ability 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 used Electronic Federal Tax Payment System (EFTPS). Employers should guarantee their payroll companies are utilizing EFTPS, so the companies can verify 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 occasionally validate payments. A red flag needs to go up the very first time a provider misses out on a payment or makes a late payment. When a company signs up on EFTPS they will have on-line access to their for 16 months. In addition, EFTPS enables employers to make any additional tax payments that their third-party provider is not making on their behalf such as approximated tax payments. There have actually been prosecutions of individuals and companies, who acting under the appearance of a payroll company, have stolen funds planned for payment of work taxes.

EFTPS is a secure, accurate, and easy to use service that supplies an immediate confirmation for each deal. This service is offered totally free of charge from the U.S. Department of Treasury and allows companies to make and validate federal tax payments digitally 24 hr a day, 7 days a week through the internet or by phone. To find out more, companies can register online at EFTPS.gov or call EFTPS Customer support at 800-555-4477 for an enrollment form or to talk to a customer care 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 notification received is a result of an issue with their payroll service provider ought to get in touch with the IRS as soon as possible by calling the number on the expense, writing to the IRS office that sent out the costs, calling 800-829-4933 or visiting a regional IRS workplace. For more details about IRS notifications, costs and payment options, refer to Publication 594, The IRS Collection Process PDF.