Outsourcing Payroll Duties

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

Many employers outsource some or all their payroll and related tax responsibilities to third-party payroll provider. Third-party payroll provider can improve business operations and help meet filing and deposit requirements. A few of the services they supply are:

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

Employers who contract out some or all their payroll responsibilities should consider the following:

– The employer is ultimately accountable for the deposit and payment of federal tax liabilities. Even though the company might forward the tax totals up to the third-party to make the tax deposits, the company is the accountable celebration. If the third-party stops working to make the federal tax payments, then the IRS might evaluate penalties and interest on the company’s account. The employer is liable for all taxes, charges and interest due. The company may also be held personally accountable for certain unsettled federal taxes.
– If there are any issues with an account, then the IRS will send correspondence to the company at the address of record. The IRS strongly suggests that the company does not alter their address of record to that of the payroll service provider as it might significantly restrict the company’s ability to be notified of tax matters involving their service.
– Electronic Funds Transfer (EFT) must be used to deposit all federal tax deposits. Generally, an EFT is made utilizing Electronic Federal Tax Payment System (EFTPS). Employers ought to ensure their payroll providers are utilizing EFTPS, so the employers can validate that payments are being made on their behalf. Employers need to register on the EFTPS system to get their own PIN and utilize this PIN to periodically confirm payments. A warning must go up the very first time a provider misses out on 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 permits companies to make any extra tax payments that their third-party company is not making on their behalf such as approximated tax payments. There have actually been prosecutions of individuals and business, who acting under the appearance of a payroll company, have actually stolen funds planned for payment of employment taxes.

EFTPS is a safe, accurate, and simple to utilize service that supplies an immediate verification for each deal. This service is offered complimentary of charge from the U.S. Department of Treasury and allows employers to make and validate federal tax payments electronically 24 hr a day, 7 days a week through the web or by phone. For more info, companies can register online at EFTPS.gov or call EFTPS Customer support at 800-555-4477 for a registration type or to speak with a customer service representative.

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

Employers who think that an expense or notice received is an outcome of an issue with their payroll service company should get in touch with the IRS as quickly as possible by calling the number on the costs, writing to the IRS office that sent the expense, calling 800-829-4933 or visiting a regional IRS office. For more details about IRS notifications, expenses and payment options, refer to Publication 594, The IRS Collection Process PDF.