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



















Many employers contract out some or all their payroll and related tax duties to third-party payroll company. Third-party payroll company can streamline company operations and assist satisfy filing due dates and deposit requirements. A few 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, gathering and transferring employment taxes with state and federal authorities.



















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



















- The company is ultimately responsible for the deposit and payment of federal tax liabilities. Even though the employer might forward the tax amounts to the third-party to make the tax deposits, the company is the responsible party. If the third-party fails to make the federal tax payments, then the IRS may evaluate penalties and interest on the employer`s account. The employer is liable for all taxes, charges and interest due. The employer may likewise be held personally accountable for certain unpaid federal taxes.















- If there are any issues with an account, then the IRS will send out correspondence to the company at the address of record. The IRS strongly suggests that the company does not alter their address of record to that of the payroll company as it may significantly limit the company`s capability to be notified of tax matters including their company.















- Electronic Funds Transfer (EFT) need to be used to deposit all federal tax deposits. Generally, an EFT is used Electronic Federal Tax Payment System (EFTPS). Employers should ensure their payroll providers are utilizing EFTPS, so the employers can verify that payments are being made on their behalf. Employers need to sign up on the EFTPS system to get their own PIN and use this PIN to occasionally validate payments. A red flag should go up 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 permits employers to make any extra tax payments that their third-party provider is not making on their behalf such as estimated tax payments. There have actually been prosecutions of people and companies, who acting under the appearance of a payroll provider, have actually stolen funds meant for of work taxes.



















EFTPS is a protected, accurate, and easy to use service that offers an immediate verification for each deal. This service is offered free of charge from the U.S. Department of Treasury and permits employers to make and confirm federal tax payments electronically 24 hr a day, 7 days a week through the web or by phone. To find out more, employers can enroll online at EFTPS.gov or call EFTPS Customer Service at 800-555-4477 for an enrollment type or to talk to a customer care representative.



















Remember, employers are eventually responsible for the payment of earnings tax withheld and of both the employer and employee parts of social security and Medicare taxes.



















Employers who believe that a costs or notice received is an outcome of an issue with their payroll company should call the IRS as soon as possible by calling the number on the bill, composing to the IRS office that sent the bill, calling 800-829-4933 or checking out a regional IRS workplace. For additional information about IRS notices, expenses and payment alternatives, describe Publication 594, The IRS Collection Process PDF.