Outsourcing Payroll Duties

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

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

– Administering payroll and work taxes on behalf of the employer where the employer provides the funds initially to the third-party.
– Reporting, gathering and depositing employment taxes with state and federal authorities.

Employers who outsource some or all their payroll obligations ought to consider the following:

– The employer is ultimately responsible for the deposit and payment of federal tax liabilities. Even though the employer may forward the tax amounts to the third-party to make the tax deposits, the company is the accountable party. If the third-party fails to make the federal tax payments, then the IRS might examine charges and interest on the employer’s account. The employer is responsible for all taxes, charges and interest due. The employer might likewise be held personally responsible for certain overdue .
– 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 strongly recommends that the employer does not alter their address of record to that of the payroll service provider as it may substantially restrict the employer’s ability to be informed of tax matters involving their service.
– Electronic Funds Transfer (EFT) need to be utilized to transfer all federal tax deposits. Generally, an EFT is used Electronic Federal Tax Payment System (EFTPS). Employers should guarantee their payroll companies are utilizing EFTPS, so the employers can validate that payments are being made on their behalf. Employers must sign up on the EFTPS system to get their own PIN and use this PIN to regularly confirm payments. A warning should increase the first time a service supplier 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 enables employers to make any extra tax payments that their third-party supplier is not making on their behalf such as approximated tax payments. There have been prosecutions of people and companies, who acting under the appearance of a payroll service provider, have actually stolen funds intended for payment of employment taxes.

EFTPS is a protected, accurate, and simple to utilize service that offers an instant verification for each transaction. This service is offered complimentary of charge from the U.S. Department of Treasury and allows companies to make and confirm federal tax payments digitally 24 hours a day, 7 days a week through the internet or by phone. To learn more, employers can register online at EFTPS.gov or call EFTPS Customer Service at 800-555-4477 for an enrollment form or to speak to a customer care representative.

Remember, employers are ultimately responsible 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 received is an outcome of an issue with their payroll company 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 checking out a regional IRS office. To find out more about IRS notices, expenses and payment options, refer to Publication 594, The IRS Collection Process PDF.