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

Many employers contract out some or all their payroll and related tax responsibilities to third-party payroll service suppliers. Third-party payroll service suppliers can simplify organization operations and assist meet filing deadlines and deposit requirements. Some of the services they supply are:

- Administering payroll and work taxes on behalf of the employer where the employer supplies the funds initially to the third-party.

Reporting, collecting and transferring work taxes with state and federal authorities.

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

- The company is eventually responsible for the deposit and payment of federal tax liabilities. Even though the company may forward the tax amounts 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 assess charges and interest on the employer's account. The company is responsible for all taxes, charges and interest due. The employer might also be held personally liable for specific unsettled 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 service provider as it might considerably limit the employer's capability to be notified of tax matters including their organization.
Electronic Funds Transfer (EFT) must be utilized to deposit all federal tax deposits. Generally, an EFT is used Electronic Federal Tax Payment System (EFTPS). Employers need to ensure their payroll service providers are utilizing EFTPS, so the employers can validate 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 regularly verify payments. A warning needs to increase the very first time a company misses 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 allows employers to make any extra tax payments that their third-party service 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 provider, have stolen funds planned for payment of work taxes.

EFTPS is a safe, accurate, and easy to utilize service that offers an instant verification for each deal. This service is offered free of charge from the U.S. Department of Treasury and to make and validate federal tax payments electronically 24 hours a day, 7 days a week through the internet or by phone. For more details, companies can enlist online at EFTPS.gov or call EFTPS Customer Service at 800-555-4477 for an enrollment type or to speak to a client service agent.

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

Employers who believe that a bill or notice gotten is a result of a problem with their payroll provider ought to call the IRS as soon as possible by calling the number on the expense, writing to the IRS workplace that sent the expense, calling 800-829-4933 or going to a local IRS office. To find out more about IRS notices, expenses and payment alternatives, refer to Publication 594, The IRS Collection Process PDF.