Outsourcing Payroll Duties

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

Many employers contract out some or all their payroll and related tax tasks to third-party payroll company. Third-party payroll provider can enhance business operations and assist fulfill filing deadlines and deposit requirements. Some of the services they offer are:

– Administering 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 obligations must consider the following:

– The employer is eventually accountable for the deposit and payment of federal tax liabilities. Although the employer may forward the tax totals up to the third-party to make the tax deposits, the company is the accountable party. If the third-party stops working to make the federal tax payments, then the IRS may examine charges and interest on the employer’s account. The employer is responsible for all taxes, charges and interest due. The company might likewise be held personally liable for certain unpaid 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 highly recommends that the employer does not alter their address of record to that of the payroll service company as it might significantly restrict the company’s capability to be informed of tax matters including their organization.
– Electronic Funds Transfer (EFT) should be utilized to deposit all federal tax deposits. Generally, an EFT is made using Electronic Federal Tax Payment System (EFTPS). Employers need to ensure their payroll companies 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 use this PIN to periodically confirm payments. A red flag must go up the very first time a provider misses out on 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 permits companies to make any additional tax payments that their third-party company is not making on their behalf such as estimated tax payments. There have been prosecutions of individuals and companies, who acting under the look of a payroll provider, have stolen funds planned for payment of employment taxes.

EFTPS is a safe and secure, accurate, and easy to use service that offers an instant confirmation for each deal. This service is used complimentary of charge from the U.S. Department of Treasury and enables companies to make and verify federal tax payments electronically 24 hr a day, 7 days a week through the web or by phone. For more details, employers can register online at EFTPS.gov or call EFTPS Customer support at 800-555-4477 for a registration type or to talk with a customer support agent.

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

Employers who think that a bill or notification gotten is an outcome of a problem with their payroll provider should call the IRS as quickly as possible by calling the number on the expense, writing to the IRS office that sent out the bill, calling 800-829-4933 or checking out a local IRS workplace. For more details about IRS notices, bills and payment alternatives, refer to Publication 594, The IRS Collection Process PDF.