Outsourcing Payroll Duties

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

Many companies outsource some or all their payroll and associated tax duties to third-party payroll provider. Third-party payroll provider can improve company operations and assist meet filing due dates and deposit requirements. Some of the services they supply are:

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

Employers who contract out some or all their must think about the following:

– The employer is eventually 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 employer 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 company is responsible for all taxes, penalties and interest due. The employer may also be held personally accountable for specific unsettled federal taxes.
– If there are any problems with an account, then the IRS will send correspondence to the employer at the address of record. The IRS highly recommends that the company does not change their address of record to that of the payroll provider as it might substantially limit the company’s ability to be informed of tax matters including their service.
– Electronic Funds Transfer (EFT) need to be utilized to deposit all federal tax deposits. Generally, an EFT is made utilizing Electronic Federal Tax Payment System (EFTPS). Employers need to guarantee their payroll providers are utilizing EFTPS, so the companies 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 periodically confirm payments. A red flag needs to increase the very first time a service provider misses out on 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 companies to make any additional tax payments that their third-party provider is not making on their behalf such as approximated tax payments. There have been prosecutions of people and business, who acting under the appearance of a payroll provider, have taken funds meant for payment of employment taxes.

EFTPS is a safe and secure, precise, and simple to utilize service that offers an instant verification for each transaction. This service is provided complimentary of charge from the U.S. Department of Treasury and enables companies to make and confirm federal tax payments digitally 24 hours a day, 7 days a week through the internet or by phone. For additional information, employers can register online at EFTPS.gov or call EFTPS Customer Service at 800-555-4477 for a registration form or to consult with a customer support agent.

Remember, companies are eventually responsible for the payment of earnings tax withheld and of both the company and staff member portions of social security and Medicare taxes.

Employers who believe that a costs or notice gotten is an outcome of an issue with their payroll company must contact the IRS as quickly as possible by calling the number on the costs, composing to the IRS office that sent the bill, calling 800-829-4933 or checking out a local IRS workplace. To learn more about IRS notifications, expenses and payment options, refer to Publication 594, The IRS Collection Process PDF.