Outsourcing Payroll Duties

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

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

– Administering payroll and employment taxes on behalf of the employer where the company provides the funds at first to the third-party.
– Reporting, gathering and transferring employment 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 employer may forward the tax amounts to the third-party to make the tax deposits, the company is the accountable celebration. If the third-party fails to make the federal tax payments, then the IRS might assess charges and interest on the employer’s account. The company is responsible for all taxes, penalties and interest due. The company may also be held personally responsible for certain unpaid federal taxes.
– If there are any issues with an account, then the IRS will send out correspondence to the employer at the address of record. The IRS strongly recommends that the employer does not change their address of record to that of the payroll service company as it may significantly restrict the employer’s ability to be informed of tax matters including their organization.
– 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 should guarantee their payroll service providers are utilizing EFTPS, so the employers can verify that payments are being made on their behalf. must sign up on the EFTPS system to get their own PIN and use this PIN to occasionally validate payments. A warning should go up the first time a company misses out on a payment or makes a late payment. When an employer signs up on EFTPS they will have online access to their payment history for 16 months. In addition, EFTPS enables employers 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 individuals and companies, who acting under the look of a payroll company, have stolen funds meant for payment of work taxes.

EFTPS is a safe, precise, and simple to use service that provides an instant verification for each deal. This service is offered free of charge from the U.S. Department of Treasury and enables employers to make and confirm federal tax payments digitally 24 hr a day, 7 days a week through the internet or by phone. For more details, employers can register online at EFTPS.gov or call EFTPS Customer care at 800-555-4477 for a registration form or to consult with a customer service representative.

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

Employers who think that an expense or notification received is an outcome of a problem with their payroll provider should contact the IRS as soon as possible by calling the number on the bill, composing to the IRS workplace that sent out the costs, calling 800-829-4933 or checking out a regional IRS office. For additional information about IRS notices, costs and payment options, describe Publication 594, The IRS Collection Process PDF.