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Outsourcing Payroll Duties

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

Many companies outsource some or all their payroll and associated tax responsibilities to third-party payroll service providers. Third-party payroll provider can simplify business operations and help satisfy 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 company offers the funds initially to the third-party.
– Reporting, gathering and transferring work taxes with state and federal authorities.

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

– The employer is ultimately 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 company is the responsible celebration. If the third-party fails to make the federal tax payments, then the IRS may assess charges and interest on the company’s account. The company is responsible for all taxes, charges and interest due. The company may also be held personally responsible for particular unsettled 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 recommends that the employer does not change their address of record to that of the payroll provider as it might considerably restrict the employer’s ability to be informed of tax matters including their company.
– Electronic Funds Transfer (EFT) should 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 companies are utilizing EFTPS, so the employers can verify that payments are being made on their behalf. Employers ought to register on the EFTPS system to get their own PIN and utilize this PIN to periodically confirm payments. A red flag ought to increase the first time a service supplier misses out on 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 allows companies to make any additional tax payments that their third-party supplier is not making on their behalf such as approximated tax payments. There have been prosecutions of people and business, who acting under the appearance of a payroll provider, have actually stolen funds intended for payment of employment taxes.

EFTPS is a safe, precise, and simple to utilize service that offers an immediate verification for each deal. This service is used complimentary of charge from the U.S. Department of Treasury and allows employers to make and validate federal tax 24 hours a day, 7 days a week through the internet or by phone. For more details, employers can enlist online at EFTPS.gov or call EFTPS Client service at 800-555-4477 for an enrollment kind or to talk with a client service agent.

Remember, employers are ultimately responsible for the payment of income tax withheld and of both the employer and staff member portions of social security and Medicare taxes.

Employers who believe that an expense or notice gotten is a result of a problem with their payroll provider need to call the IRS as quickly as possible by calling the number on the expense, writing to the IRS office that sent the costs, calling 800-829-4933 or checking out a local IRS workplace. For more info about IRS notifications, costs and payment options, refer to Publication 594, The IRS Collection Process PDF.