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

Many companies contract out some or all their payroll and associated tax duties to third-party payroll provider. Third-party payroll service companies can enhance service operations and help fulfill filing due dates and deposit requirements. Some of the services they supply are:

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

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

- The company is eventually accountable for the deposit and payment of federal tax liabilities. Despite the fact that the company might forward the tax amounts to the third-party to make the tax deposits, the employer is the responsible party. If the third-party fails to make the federal tax payments, then the IRS may evaluate charges and interest on the company's account. The company is accountable for all taxes, penalties and interest due. The company may likewise be held personally responsible for particular unpaid 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 might substantially limit the company's ability to be notified of tax matters involving their service.
- Electronic Funds Transfer (EFT) need to be used to transfer all federal tax deposits. Generally, an EFT is made utilizing Electronic Federal Tax Payment System (EFTPS). Employers ought to guarantee their payroll providers are using EFTPS, so the employers can validate that payments are being made on their behalf. Employers must register on the EFTPS system to get their own PIN and use this PIN to regularly confirm . A red flag should go up the very first time a company misses a payment or makes a late payment. When an employer signs up on EFTPS they will have online access to their payment history for 16 months. In addition, EFTPS allows employers to make any extra tax payments that their third-party supplier is not making on their behalf such as estimated tax payments. There have been prosecutions of individuals and companies, who acting under the appearance of a payroll service provider, have stolen funds planned for payment of employment taxes.

EFTPS is a safe and secure, precise, and easy to utilize service that offers an instant confirmation for each transaction. This service is provided totally free of charge from the U.S. Department of Treasury and permits employers to make and validate federal tax payments electronically 24 hr a day, 7 days a week through the web or by phone. To find out more, employers can enlist online at EFTPS.gov or call EFTPS Customer support at 800-555-4477 for a registration type or to speak to a consumer service representative.

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

Employers who believe that a costs or notification gotten is an outcome of a problem with their payroll provider should get in touch with the IRS as soon as possible by calling the number on the bill, writing to the IRS office that sent the bill, calling 800-829-4933 or going to a regional IRS office. To learn more about IRS notifications, expenses and payment choices, describe Publication 594, The IRS Collection Process PDF.