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Outsourcing payroll tasks can be a sound organization practice, but ... Know your tax responsibilities as an employer
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Many employers contract out some or all their payroll and associated tax duties to third-party payroll company. Third-party payroll provider can improve business operations and assist meet filing deadlines 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 depositing employment taxes with state and federal authorities.

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

- The company is eventually responsible 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 employer is the responsible party. If the third-party fails to make the federal tax payments, then the IRS may evaluate charges and interest on the company's account. The employer is accountable for all taxes, charges and interest due. The company may likewise be held personally responsible for specific taxes.
If there are any concerns with an account, then the IRS will send correspondence to the company at the address of record. The IRS strongly recommends that the employer does not alter their address of record to that of the payroll provider as it may considerably restrict the employer's capability to be informed of tax matters including their business.
Electronic Funds Transfer (EFT) need to be used to deposit all federal tax deposits. Generally, an EFT is used Electronic Federal Tax Payment System (EFTPS). Employers need to guarantee their payroll providers are using 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 regularly validate payments. A warning needs to increase the very first time a service 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 allows companies to make any extra tax payments that their third-party service provider is not making on their behalf such as estimated tax payments. There have actually been prosecutions of individuals and companies, who acting under the appearance of a payroll provider, have taken funds intended for payment of work taxes.

EFTPS is a safe, accurate, and simple to use service that supplies an instant confirmation for each transaction. This service is provided totally free of charge from the U.S. Department of Treasury and permits companies to make and verify federal tax payments electronically 24 hr a day, 7 days a week through the web or by phone. For additional information, companies can register online at EFTPS.gov or call EFTPS Customer care at 800-555-4477 for an enrollment type or to speak with a customer care representative.

Remember, employers are eventually accountable for the payment of earnings tax withheld and of both the company and staff member parts of social security and Medicare taxes.

Employers who believe that a costs or notice gotten is an outcome of a problem with their payroll service supplier ought to contact the IRS as soon as possible by calling the number on the expense, writing to the IRS workplace that sent the bill, calling 800-829-4933 or visiting a regional IRS workplace. For more details about IRS notices, costs and payment choices, refer to Publication 594, The IRS Collection Process PDF.
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