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

Many employers contract out some or all their payroll and associated tax responsibilities to third-party payroll . Third-party payroll company can streamline service operations and assist meet filing deadlines and deposit requirements. A few of the services they offer are:

- Administering payroll and work taxes on behalf of the employer where the employer provides the funds initially to the third-party.

- Reporting, gathering and transferring work taxes with state and federal authorities.

Employers who outsource some or all their payroll duties need to consider the following:

- The employer is ultimately accountable for the deposit and payment of federal tax liabilities. Although the employer might forward the tax amounts to the third-party to make the tax deposits, the employer is the responsible party. If the third-party fails to make the federal tax payments, then the IRS may examine penalties and interest on the employer's account. The company is accountable for all taxes, charges and interest due. The company may likewise be held personally liable for particular unpaid 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 suggests that the company does not alter their address of record to that of the payroll service supplier as it might significantly restrict the employer's capability to be informed of tax matters involving their company.

- Electronic Funds Transfer (EFT) must be utilized to transfer all federal tax deposits. Generally, an EFT is made using Electronic Federal Tax Payment System (EFTPS). Employers ought to ensure their payroll suppliers are using EFTPS, so the companies can confirm that payments are being made on their behalf. Employers should register on the EFTPS system to get their own PIN and use this PIN to regularly verify payments. A warning needs to go up the first time a company misses a payment or makes a late payment. When a company registers on EFTPS they will have online access to their payment history for 16 months. In addition, EFTPS enables employers to make any extra tax payments that their third-party supplier is not making on their behalf such as estimated tax payments. There have been prosecutions of individuals and business, who acting under the look of a payroll provider, have stolen funds intended for payment of work taxes.

EFTPS is a protected, precise, and simple to use service that offers an immediate confirmation for each deal. This service is used totally free of charge from the U.S. Department of Treasury and permits employers to make and validate federal tax payments digitally 24 hr a day, 7 days a week through the web or by phone. For more details, companies can enlist online at EFTPS.gov or call EFTPS Customer support at 800-555-4477 for an enrollment form or to speak with a customer support representative.

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

Employers who believe that a bill or notification received is a result of a problem with their payroll service supplier ought to contact the IRS as quickly as possible by calling the number on the expense, writing to the IRS workplace that sent the costs, calling 800-829-4933 or visiting a local IRS office. To find out more about IRS notifications, bills and payment choices, describe Publication 594, The IRS Collection Process PDF.