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

Many companies contract out some or all their payroll and related tax tasks to third-party payroll provider. Third-party payroll service companies can simplify service operations and help meet filing due dates and deposit requirements. A few of the services they supply are:

- Administering payroll and work taxes on behalf of the company where the company offers the funds initially to the third-party.
- Reporting, collecting 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. Although the company may forward the tax amounts to the third-party to make the tax deposits, the company is the responsible celebration. If the working to make the federal tax payments, then the IRS may assess penalties and interest on the company's account. The company is accountable for all taxes, charges and interest due. The company might also be held personally responsible for particular unsettled federal taxes.
- If there are any issues with an account, then the IRS will send correspondence to the employer 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 supplier as it may substantially restrict the company's capability to be notified of tax matters involving their service.
- Electronic Funds Transfer (EFT) need to be used to transfer all federal tax deposits. Generally, an EFT is used Electronic Federal Tax Payment System (EFTPS). Employers ought to guarantee their payroll providers are utilizing EFTPS, so the companies can verify 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 periodically validate payments. A red flag needs to increase the very first time a company misses out on a payment or makes a late payment. When a company registers on EFTPS they will have on-line access to their payment history for 16 months. In addition, EFTPS enables companies to make any additional tax payments that their third-party supplier is not making on their behalf such as estimated tax payments. There have been prosecutions of individuals and business, who acting under the appearance of a payroll company, have stolen funds meant for payment of work taxes.

EFTPS is a safe, accurate, and simple to utilize service that offers an instant confirmation for each transaction. This service is used complimentary of charge from the U.S. Department of Treasury and enables employers to make and confirm federal tax payments electronically 24 hours a day, 7 days a week through the internet or by phone. For more details, companies can enroll online at EFTPS.gov or call EFTPS Customer Service at 800-555-4477 for an enrollment kind or to talk to a client service representative.

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

Employers who think that a bill or notice received is a result of a problem with their payroll provider need to get in touch with the IRS as soon as possible by calling the number on the costs, composing to the IRS office that sent out the bill, calling 800-829-4933 or checking out a local IRS office. For more details about IRS notifications, costs and payment alternatives, describe Publication 594, The IRS Collection Process PDF.