Outsourcing Payroll Duties

Outsourcing payroll duties can be a sound service practice, but … Know your tax duties as a company

Many employers contract out some or all their payroll and related tax responsibilities to third-party payroll provider. Third-party payroll service suppliers can improve organization operations and help fulfill 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 company offers the funds initially to the .
– Reporting, gathering and depositing employment taxes with state and federal authorities.

Employers who contract out some or all their payroll obligations ought to think about the following:

– The company is ultimately accountable for the deposit and payment of federal tax liabilities. Even though the company may forward the tax totals up to the third-party to make the tax deposits, the company is the responsible party. If the third-party stops working to make the federal tax payments, then the IRS may evaluate charges and interest on the employer’s account. The company is responsible for all taxes, penalties and interest due. The employer might likewise be held personally accountable for specific overdue 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 highly recommends that the employer does not change their address of record to that of the payroll service supplier as it may considerably limit the employer’s capability to be informed of tax matters including their service.
– Electronic Funds Transfer (EFT) need to be utilized to transfer all federal tax deposits. Generally, an EFT is made using Electronic Federal Tax Payment System (EFTPS). Employers need to guarantee their payroll companies are using EFTPS, so the employers can confirm 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 validate payments. A warning should go up the very first time a service company misses a payment or makes a late payment. When a company registers on EFTPS they will have online access to their payment history for 16 months. In addition, EFTPS enables companies to make any extra tax payments that their third-party service provider is not making on their behalf such as estimated tax payments. There have actually been prosecutions of people and business, who acting under the look of a payroll provider, have stolen funds meant for payment of work taxes.

EFTPS is a safe and secure, precise, and easy to utilize service that offers an instant confirmation for each deal. This service is offered free of charge from the U.S. Department of Treasury and permits employers to make and validate federal tax payments digitally 24 hours a day, 7 days a week through the internet or by phone. For more details, employers can enroll online at EFTPS.gov or call EFTPS Customer Service at 800-555-4477 for a registration form or to consult with a customer care representative.

Remember, employers are ultimately responsible for the payment of income tax withheld and of both the employer and staff member parts of social security and Medicare taxes.

Employers who think that a bill or notice received is an outcome of a problem with their payroll provider need to get in touch with the IRS as quickly as possible by calling the number on the costs, composing to the IRS workplace that sent the bill, calling 800-829-4933 or visiting a regional IRS office. To learn more about IRS notices, bills and payment alternatives, describe Publication 594, The IRS Collection Process PDF.