Outsourcing Payroll Duties

Outsourcing payroll tasks can be a sound organization practice, but … Know your tax duties as a company

Many employers contract out some or all their payroll and associated tax duties to third-party payroll provider. Third-party payroll service suppliers can streamline business operations and assist satisfy filing due dates and deposit requirements. A few of the services they offer are:

– Administering payroll and work taxes on behalf of the company where the company offers the funds at first to the third-party.
– Reporting, gathering and transferring work taxes with state and federal authorities.

Employers who contract out some or all their payroll duties ought to think about the following:

– The employer is ultimately accountable for the deposit and payment of federal tax liabilities. Despite the fact that the employer may forward the tax amounts to the third-party to make the tax deposits, the employer is the accountable celebration. If the third-party stops working to make the federal tax payments, then the IRS may assess penalties and interest on the company’s account. The company is accountable for all taxes, charges and interest due. The company might also be held personally liable for specific overdue federal taxes.
– If there are any concerns with an account, then the IRS will send correspondence to the employer at the of record. The IRS strongly recommends that the company does not alter their address of record to that of the payroll service provider as it might substantially restrict the company’s ability to be notified of tax matters involving their organization.
– 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 must guarantee their payroll companies are utilizing EFTPS, so the employers can validate 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 should 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 company is not making on their behalf such as estimated tax payments. There have actually been prosecutions of people and companies, who acting under the appearance of a payroll service provider, have actually taken funds planned for payment of work taxes.

EFTPS is a secure, precise, and simple to use service that offers an immediate verification for each deal. This service is offered complimentary 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. To learn more, companies can register online at EFTPS.gov or call EFTPS Client service at 800-555-4477 for a registration kind or to talk to a client service representative.

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

Employers who believe that a bill or notification received is an outcome of a problem with their payroll company need to contact the IRS as soon as possible by calling the number on the costs, writing to the IRS office 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 alternatives, describe Publication 594, The IRS Collection Process PDF.