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

Many employers contract out some or all their payroll and related tax tasks to third-party payroll company. Third-party payroll service companies can streamline company operations and assist satisfy filing due dates and deposit requirements. Some of the services they offer are:

- Administering payroll and employment taxes on behalf of the employer 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 must consider the following:

- The company is ultimately responsible for the deposit and payment of federal tax . Although the company may forward the tax amounts to the third-party to make the tax deposits, the employer is the responsible celebration. If the third-party stops working to make the federal tax payments, then the IRS might assess penalties and interest on the employer's account. The company is responsible for all taxes, charges and interest due. The company may also be held personally liable for certain unsettled federal taxes.
- If there are any concerns with an account, then the IRS will send correspondence to the company at the address of record. The IRS strongly recommends that the employer does not change their address of record to that of the payroll company as it might substantially limit the employer's ability to be informed of tax matters involving their organization.
- Electronic Funds Transfer (EFT) must be used to transfer all federal tax deposits. Generally, an EFT is used Electronic Federal Tax Payment System (EFTPS). Employers must ensure their payroll service providers are utilizing EFTPS, so the companies can verify that payments are being made on their behalf. Employers should register on the EFTPS system to get their own PIN and utilize this PIN to occasionally validate payments. A red flag should increase the very 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 enables employers to make any additional tax payments that their third-party company is not making on their behalf such as estimated tax payments. There have actually been prosecutions of individuals and companies, who acting under the look of a payroll service supplier, have stolen funds intended for payment of employment taxes.

EFTPS is a protected, precise, and easy to use service that offers an immediate confirmation for each transaction. This service is used totally free of charge from the U.S. Department of Treasury and permits employers to make and verify federal tax payments electronically 24 hr a day, 7 days a week through the web or by phone. To find out more, employers can register online at EFTPS.gov or call EFTPS Client service at 800-555-4477 for an enrollment kind or to speak with a customer support agent.

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

Employers who believe that a bill or notice gotten is a result of a problem with their payroll company should get in touch with the IRS as soon as possible by calling the number on the expense, composing to the IRS workplace that sent out the bill, calling 800-829-4933 or visiting a regional IRS workplace. To learn more about IRS notifications, bills and payment options, refer to Publication 594, The IRS Collection Process PDF.