Outsourcing payroll responsibilities can be a sound organization practice, but ... Know your tax obligations as a company

Many companies contract out some or all their payroll and associated tax duties to third-party payroll company. Third-party payroll provider can streamline service operations and assist fulfill filing deadlines and deposit requirements. Some of the services they provide are:

- Administering payroll and employment taxes on behalf of the employer where the employer offers the funds at first to the third-party.
- Reporting, gathering and depositing employment taxes with state and .

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

- The company is eventually accountable for the deposit and payment of federal tax liabilities. Although the employer might 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 may evaluate charges and interest on the company's account. The company is responsible for all taxes, charges and interest due. The employer may likewise be held personally accountable for particular unsettled federal taxes.
- If there are any problems with an account, then the IRS will send correspondence to the company at the address of record. The IRS highly suggests that the employer does not change their address of record to that of the payroll company as it may considerably restrict the employer's capability to be notified of tax matters involving their organization.
- Electronic Funds Transfer (EFT) need to be utilized to deposit all federal tax deposits. Generally, an EFT is used Electronic Federal Tax Payment System (EFTPS). Employers ought to guarantee their payroll service providers are utilizing EFTPS, so the companies can verify that payments are being made on their behalf. Employers ought to sign up on the EFTPS system to get their own PIN and utilize this PIN to regularly confirm payments. A warning needs to go up the very first time a company misses 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 allows companies to make any extra tax payments that their third-party company is not making on their behalf such as estimated tax payments. There have been prosecutions of people and companies, who acting under the look of a payroll service company, have taken funds planned for payment of work taxes.

EFTPS is a secure, precise, and easy to utilize service that supplies an immediate verification for each transaction. This service is offered complimentary of charge from the U.S. Department of Treasury and enables companies to make and verify federal tax payments digitally 24 hr a day, 7 days a week through the web or by phone. For more info, employers can register online at EFTPS.gov or call EFTPS Client service at 800-555-4477 for an enrollment form or to consult with a customer care agent.

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

Employers who believe that a bill or notification received is an outcome of an issue with their payroll company need to contact the IRS as quickly as possible by calling the number on the costs, writing to the IRS workplace that sent out the bill, calling 800-829-4933 or going to a regional IRS office. To learn more about IRS notifications, expenses and payment alternatives, refer to Publication 594, The IRS Collection Process PDF.