Outsourcing Payroll Duties

Outsourcing payroll responsibilities can be a sound service practice, however … Know your tax responsibilities as an employer

Many employers contract out some or all their payroll and related tax tasks to third-party payroll provider. Third-party payroll service providers can streamline company operations and assist satisfy filing deadlines and deposit requirements. Some of the services they offer are:

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

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

– The employer is eventually responsible for the deposit and payment of federal tax liabilities. Although the employer might forward the tax amounts to the third-party to make the tax deposits, the employer is the responsible 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 liable for all taxes, charges and interest due. The company may likewise be held personally responsible for particular 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 employer does not change their address of record to that of the payroll company as it may considerably restrict the company’s ability to be notified of tax matters including their service.
– Electronic Funds Transfer (EFT) need to be used to deposit all federal tax deposits. Generally, an EFT is made using Electronic Federal Tax Payment System (EFTPS). Employers need to ensure their payroll service providers are utilizing EFTPS, so the employers can validate that payments are being made on their behalf. Employers ought to sign up on the EFTPS system to get their own PIN and use this PIN to regularly confirm payments. A red flag needs to go up the very first time a service supplier misses out on a payment or makes a late payment. When an employer 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 approximated tax payments. There have actually been prosecutions of individuals and business, who acting under the appearance of a payroll service supplier, have stolen funds planned for payment of work taxes.

EFTPS is a safe, accurate, and simple to use service that offers an instant confirmation for each transaction. This service is used free of charge from the U.S. Department of Treasury and permits companies to make and confirm federal tax payments digitally ۲۴ hours a day, 7 days a week through the web or by phone. To find out more, companies can enroll online at EFTPS.gov or call EFTPS Customer care at 800-555-4477 for a or to speak with a customer service representative.

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

Employers who think that a costs or notification received is a result of an issue with their payroll service provider should contact the IRS as quickly as possible by calling the number on the costs, composing to the IRS workplace that sent the costs, calling 800-829-4933 or going to a regional IRS workplace. For more info about IRS notifications, bills and payment options, describe Publication 594, The IRS Collection Process PDF.