Outsourcing Payroll Duties

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

Many employers outsource some or all their payroll and associated tax tasks to third-party payroll service providers. Third-party payroll provider can improve business operations and help fulfill filing due dates and deposit requirements. A few of the services they provide are:

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

Employers who contract out some or all their payroll duties should think about the following:

— The employer is eventually accountable for the deposit and payment of federal tax liabilities. Although the company might forward the tax amounts to the third-party to make the tax deposits, the company is the accountable celebration. If the third-party fails to make the federal tax payments, then the IRS may evaluate charges and interest on the employer’s account. The company is liable for all taxes, penalties and interest due. The employer may also be held personally responsible for particular unpaid federal taxes.
— If there are any issues with an account, then the IRS will send correspondence to the employer at the address of record. The IRS strongly recommends that the employer does not alter their address of record to that of the payroll company as it may considerably restrict the employer’s ability to be informed of tax matters involving their organization.
— 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 service providers are utilizing EFTPS, so the employers can confirm that payments are being made on their behalf. Employers must register on the EFTPS system to get their own PIN and utilize this PIN to periodically confirm payments. A warning needs to go up the very first time a service provider misses a payment or makes a late payment. When a company signs up on EFTPS they will have online access to their payment history for 16 months. In addition, EFTPS allows companies to make any additional tax payments that their third-party supplier is not making on their behalf such as estimated tax payments. There have actually been prosecutions of individuals and business, who acting under the look of a payroll provider, have stolen funds intended for payment of employment taxes.

EFTPS is a safe and secure, precise, and simple to utilize service that offers an instant confirmation for each deal. This service is used free of charge from the U.S. Department of Treasury and permits companies to make and confirm federal tax payments electronically 24 hours a day, 7 days a week through the internet or by phone. To find out more, companies can enroll online at EFTPS.gov or call EFTPS Customer care at 800-555-4477 for a registration type or to speak to a customer care agent.

Remember, employers are eventually accountable for the payment of earnings tax withheld and of both the and staff member portions of social security and Medicare taxes.

Employers who think that an expense or notice gotten is a result of an issue with their payroll provider should call the IRS as quickly as possible by calling the number on the bill, composing to the IRS workplace that sent the bill, calling 800-829-4933 or visiting a regional IRS workplace. For more details about IRS notifications, costs and payment options, describe Publication 594, The IRS Collection Process PDF.