Outsourcing Payroll Duties

Outsourcing payroll responsibilities can be a sound organization practice, however … Know your tax responsibilities as a company

Many employers outsource some or all their payroll and related tax duties to third-party payroll company. Third-party payroll service suppliers can simplify service operations and assist satisfy filing due dates and deposit requirements. A few of the services they provide are:

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

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

– The employer is ultimately responsible for the deposit and payment of federal tax liabilities. Despite the fact that the company might 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 may examine charges and interest on the company’s account. The employer is responsible 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 company at the address of record. The IRS strongly suggests that the employer does not alter their address of record to that of the payroll service supplier as it may considerably limit the employer’s ability to be informed of tax matters including their business.
– Electronic Funds Transfer (EFT) should be utilized to deposit all federal tax deposits. Generally, an EFT is used Electronic Federal Tax Payment System (EFTPS). Employers ought to ensure their payroll providers are utilizing EFTPS, so the companies can confirm that payments are being made on their behalf. Employers need to register on the EFTPS system to get their own PIN and use this PIN to regularly validate payments. A warning should increase the very first time a service company misses out on a payment or makes a late payment. When an registers on EFTPS they will have on-line access to their payment history for 16 months. In addition, EFTPS enables employers to make any extra tax payments that their third-party service provider is not making on their behalf such as estimated tax payments. There have been prosecutions of individuals and business, who acting under the look of a payroll provider, have taken funds intended for payment of employment taxes.

EFTPS is a safe and secure, accurate, and simple to use service that provides an instant verification for each transaction. This service is offered free of charge from the U.S. Department of Treasury and allows companies 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 enroll online at EFTPS.gov or call EFTPS Customer Service at 800-555-4477 for a registration form or to talk to a customer care agent.

Remember, employers are ultimately accountable for the payment of earnings tax kept and of both the company and employee portions of social security and Medicare taxes.

Employers who think that a costs or notice received is an outcome of an issue with their payroll provider should 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 going to a regional IRS office. To find out more about IRS notifications, expenses and payment choices, refer to Publication 594, The IRS Collection Process PDF.