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

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

- Administering payroll and work taxes on behalf of the employer where the company supplies the funds at first to the third-party.

• Reporting, gathering and depositing employment taxes with state and federal authorities.
  
  Employers who outsource some or all their payroll obligations should consider the following:
  
  - The company is ultimately accountable for the deposit and payment of federal tax liabilities. Although the company might forward the tax totals up to the third-party to make the tax deposits, the company is the accountable party. If the third-party stops working to make the federal tax payments, then the IRS might evaluate penalties 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 liable for specific overdue federal taxes.
• If there are any concerns with an account, then the IRS will send correspondence to the employer 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 supplier as it might considerably limit the employer's ability to be notified of tax matters including their company.
• 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 need to guarantee their payroll service providers are utilizing EFTPS, so the companies can confirm that payments are being made on their behalf. ought to sign up on the EFTPS system to get their own PIN and use this PIN to regularly validate payments. A red flag ought to increase the very first time a service supplier misses 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 permits employers to make any additional tax payments that their third-party company is not making on their behalf such as approximated tax payments. There have been prosecutions of individuals and business, who acting under the look of a payroll provider, have stolen funds intended for payment of work taxes.
  
  EFTPS is a safe, precise, and easy to utilize service that provides an immediate confirmation for each transaction. This service is offered totally free of charge from the U.S. Department of Treasury and enables companies to make and verify federal tax payments digitally 24 hours a day, 7 days a week through the internet or by phone. For additional information, companies can enlist online at EFTPS.gov or call EFTPS Client service at 800-555-4477 for an enrollment type or to consult with a client service representative.
  
  Remember, employers are eventually accountable for the payment of earnings tax withheld and of both the company and staff member portions of social security and Medicare taxes.
  
  Employers who think that a bill or notification gotten is a result of an issue with their payroll service provider must call the IRS as quickly as possible by calling the number on the bill, writing to the IRS office that sent the costs, calling 800-829-4933 or checking out a local IRS office. To learn more about IRS notifications, expenses and payment options, refer to Publication 594, The IRS Collection Process PDF.