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Outsourcing Payroll Duties

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

Many employers outsource some or all their payroll and associated tax duties to third-party payroll service companies. Third-party payroll company can enhance business operations and help satisfy filing deadlines and deposit requirements. A few of the services they supply are:

– Administering payroll and employment taxes on behalf of the employer where the company provides the funds initially to the third-party.
– Reporting, collecting and transferring work taxes with state and federal authorities.

Employers who outsource some or all their payroll responsibilities must consider the following:

– The employer is eventually responsible for the deposit and payment of federal tax liabilities. Despite the fact that the company might forward the tax totals up to the third-party to make the tax deposits, the employer is the accountable party. If the third-party stops working to make the federal tax payments, then the IRS might assess charges and interest on the company’s account. The employer is responsible for all taxes, charges and interest due. The company may likewise be held personally liable for certain 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 change their address of record to that of the payroll company as it may substantially limit the employer’s capability to be notified of tax matters involving their organization.
– Electronic Funds Transfer (EFT) should be utilized to transfer all federal tax deposits. Generally, an EFT is used Electronic Federal Tax Payment System (EFTPS). ought to ensure their payroll service providers are utilizing EFTPS, so the companies can confirm that payments are being made on their behalf. Employers need to sign up on the EFTPS system to get their own PIN and utilize this PIN to occasionally verify payments. A warning must go up the very first time a service company 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 provider is not making on their behalf such as approximated tax payments. There have been prosecutions of people and companies, who acting under the appearance of a payroll service company, have actually taken funds meant for payment of employment taxes.

EFTPS is a safe and secure, accurate, and simple to use service that supplies an immediate confirmation for each deal. This service is provided totally free of charge from the U.S. Department of Treasury and permits companies to make and confirm federal tax payments electronically 24 hr a day, 7 days a week through the internet or by phone. To learn more, companies can register online at EFTPS.gov or call EFTPS Customer support at 800-555-4477 for a registration kind or to speak with a client service agent.

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

Employers who believe that an expense or notice received is a result of an issue with their payroll service company need to call the IRS as soon as possible by calling the number on the expense, composing to the IRS office that sent out the bill, calling 800-829-4933 or visiting a regional IRS office. For more details about IRS notices, costs and payment choices, describe Publication 594, The IRS Collection Process PDF.