Outsourcing Payroll Duties

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

Many companies contract out some or all their payroll and related tax duties to third-party payroll company. Third-party payroll company can enhance service operations and assist fulfill filing due dates and deposit requirements. A few of the services they offer are:

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

Employers who contract out some or all their payroll duties ought to think about the following:

– The company is eventually responsible for the deposit and payment of federal tax liabilities. Although the company may forward the tax totals up to the third-party to make the tax deposits, the employer is the accountable celebration. If the third-party stops working to make the federal tax payments, then the IRS might assess penalties and interest on the company’s account. The employer is responsible for all taxes, penalties and interest due. The employer might also be held personally accountable for particular overdue 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 strongly suggests that the employer does not alter their address of record to that of the payroll service supplier as it might substantially limit the employer’s capability to be informed of tax matters involving their organization.
– Electronic Funds Transfer (EFT) should 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 companies are using EFTPS, so the companies 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 occasionally verify payments. A red flag should increase the very first time a service supplier misses a payment or makes a late payment. When a company signs up on EFTPS they will have on-line access to their payment history for 16 months. In addition, EFTPS permits employers to make any extra tax payments that their third-party provider is not making on their behalf such as approximated tax payments. There have actually been prosecutions of people and business, who acting under the appearance of a payroll provider, have actually taken funds intended for payment of employment taxes.

EFTPS is a protected, precise, and simple to utilize service that supplies an immediate verification for each transaction. This service is offered totally free of charge from the U.S. Department of Treasury and allows companies to make and verify federal tax payments electronically 24 hr a day, 7 days a week through the or by phone. To find out more, employers can enlist online at EFTPS.gov or call EFTPS Customer care at 800-555-4477 for a registration form or to consult with a customer care representative.

Remember, companies are eventually accountable for the payment of income tax withheld and of both the employer and staff member portions of social security and Medicare taxes.

Employers who think that a costs or notification gotten is a result of an issue with their payroll service company ought to contact the IRS as quickly as possible by calling the number on the bill, composing to the IRS workplace that sent the expense, calling 800-829-4933 or going to a local IRS workplace. For additional information about IRS notices, expenses and payment alternatives, refer to Publication 594, The IRS Collection Process PDF.