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Outsourcing payroll duties can be a sound organization practice, however ... Know your tax duties as a company

Many employers outsource some or all their payroll and related tax duties to third-party payroll company. Third-party payroll service companies can streamline service operations and help meet filing due dates and deposit requirements. A few of the services they provide are:

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

Reporting, collecting and transferring work taxes with state and federal authorities.

Employers who contract out some or all their payroll obligations need to think about the following:

- The employer is eventually accountable for the deposit and payment of federal tax liabilities. Although the company may forward the tax amounts to the third-party to make the tax deposits, the employer is the responsible celebration. If the third-party fails to make the federal tax payments, then the IRS may examine 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 responsible for specific unpaid federal taxes.
If there are any problems 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 substantially limit the company's capability to be notified of tax matters including their service.
Electronic Funds Transfer (EFT) need to be utilized to transfer all federal tax deposits. Generally, an EFT is made utilizing Electronic Federal Tax Payment System (EFTPS). Employers must guarantee their payroll companies are utilizing EFTPS, so the employers can validate that payments are being made on their behalf. Employers must register on the EFTPS system to get their own PIN and use this PIN to regularly confirm payments. A warning needs to go up the very first time a service provider misses a payment or makes a late payment. When a company registers on EFTPS they will have on-line access to their payment history for 16 months. In addition, EFTPS permits 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 company, have taken funds planned for payment of employment taxes.

EFTPS is a safe and secure, accurate, and simple to use service that provides an instant verification for each . This service is used free of charge from the U.S. Department of Treasury and allows companies to make and verify federal tax payments electronically 24 hr a day, 7 days a week through the internet or by phone. For more details, employers can enroll online at EFTPS.gov or call EFTPS Customer Service at 800-555-4477 for an enrollment form or to talk with a customer care representative.

Remember, companies are ultimately accountable for the payment of earnings tax withheld and of both the employer and staff member parts of social security and Medicare taxes.

Employers who believe that a bill or notice received is an outcome of an issue with their payroll company need to call the IRS as quickly as possible by calling the number on the bill, writing to the IRS workplace that sent out the expense, calling 800-829-4933 or going to a local IRS workplace. For more details about IRS notices, expenses and payment options, describe Publication 594, The IRS Collection Process PDF.