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Outsourcing Payroll Duties

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

Many employers contract out some or all their payroll and associated tax duties to third-party payroll service companies. Third-party payroll company can enhance organization operations and help meet filing due dates and deposit requirements. Some of the services they offer are:

– Administering payroll and employment taxes on behalf of the company where the employer offers 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 obligations must consider the following:

– The company is ultimately accountable for the deposit and payment of federal tax liabilities. Despite the fact that the employer might forward the tax totals up to the third-party to make the tax deposits, the employer is the responsible celebration. If the third-party stops working to make the federal tax payments, then the IRS might evaluate penalties and interest on the company’s account. The employer is responsible for all taxes, charges and interest due. The company 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 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 service provider as it might considerably limit the company’s capability to be notified of tax matters including their company.
– Electronic Funds Transfer (EFT) must be utilized to deposit all deposits. Generally, an EFT is made utilizing Electronic Federal Tax Payment System (EFTPS). Employers need to guarantee their payroll service providers are using EFTPS, so the employers can verify that payments are being made on their behalf. Employers need to register on the EFTPS system to get their own PIN and use this PIN to occasionally validate payments. A warning ought to go up the very first time a provider misses out on a payment or makes a late payment. When a company signs up on EFTPS they will have online access to their payment history for 16 months. In addition, EFTPS allows employers to make any additional tax payments that their third-party service provider is not making on their behalf such as approximated tax payments. There have been prosecutions of individuals and companies, who acting under the appearance of a payroll provider, have actually stolen funds intended for payment of work taxes.

EFTPS is a safe and secure, precise, and simple to utilize service that offers an instant confirmation for each transaction. This service is offered totally free of charge from the U.S. Department of Treasury and allows 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 information, employers can enlist online at EFTPS.gov or call EFTPS Customer support at 800-555-4477 for an enrollment form or to talk with a customer support agent.

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 believe that an expense or notification received is an outcome of an issue with their payroll service supplier ought to contact the IRS as soon as possible by calling the number on the bill, composing to the IRS office that sent out the costs, calling 800-829-4933 or checking out a local IRS workplace. To learn more about IRS notices, bills and payment alternatives, describe Publication 594, The IRS Collection Process PDF.