Outsourcing Payroll Duties

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

Many employers outsource some or all their payroll and related tax tasks to third-party payroll provider. Third-party payroll service suppliers can streamline service operations and assist fulfill filing deadlines and deposit requirements. A few of the services they offer are:

– Administering payroll and employment taxes on behalf of the company where the company supplies the funds at first to the third-party.
– Reporting, collecting and depositing work taxes with state and federal authorities.

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

– The company is ultimately accountable for the deposit and payment of federal tax liabilities. Even though the company may forward the tax amounts to the third-party to make the tax deposits, the company is the accountable celebration. If the third-party stops working to make the federal tax payments, then the IRS may evaluate penalties and interest on the . The employer is accountable for all taxes, penalties and interest due. The company might also be held personally responsible for particular unsettled federal taxes.
– If there are any problems with an account, then the IRS will send out correspondence to the company at the address of record. The IRS strongly suggests that the company does not change their address of record to that of the payroll company as it may substantially restrict the employer’s capability to be informed of tax matters including their business.
– Electronic Funds Transfer (EFT) should be used to deposit all federal tax deposits. Generally, an EFT is used Electronic Federal Tax Payment System (EFTPS). Employers must ensure their payroll suppliers are utilizing EFTPS, so the companies can verify that payments are being made on their behalf. Employers ought to register on the EFTPS system to get their own PIN and use this PIN to periodically confirm payments. A warning must increase the very first time a company misses 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 enables employers to make any additional tax payments that their third-party service provider is not making on their behalf such as estimated tax payments. There have been prosecutions of people and companies, who acting under the appearance of a payroll service supplier, have taken funds intended for payment of employment taxes.

EFTPS is a secure, precise, and simple to utilize service that offers an immediate verification for each transaction. This service is used complimentary of charge from the U.S. Department of Treasury and permits companies to make and confirm federal tax payments digitally 24 hours a day, 7 days a week through the web or by phone. For more details, companies can register online at EFTPS.gov or call EFTPS Customer care at 800-555-4477 for an enrollment kind or to speak to a customer care agent.

Remember, companies are eventually responsible for the payment of earnings tax kept and of both the company and staff member portions of social security and Medicare taxes.

Employers who think that a bill or notice received is a result of an issue with their payroll company must call the IRS as quickly as possible by calling the number on the expense, composing to the IRS office that sent out the costs, calling 800-829-4933 or visiting a local IRS workplace. For more information about IRS notices, expenses and payment options, describe Publication 594, The IRS Collection Process PDF.