Outsourcing Payroll Duties

Outsourcing payroll responsibilities can be a sound service practice, however … Know your tax duties as a company

Many companies contract out some or all their payroll and related tax duties to third-party payroll service providers. Third-party payroll service suppliers can improve organization operations and assist fulfill filing deadlines and deposit requirements. Some of the services they provide are:

– Administering payroll and employment taxes on behalf of the employer where the company supplies 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 obligations ought to think about the following:

– The employer is eventually accountable for the deposit and payment of federal tax liabilities. Although the employer may forward the tax amounts to the third-party to make the tax deposits, the company is the responsible celebration. If the third-party stops working to make the tax payments, then the IRS may evaluate charges and interest on the employer’s account. The employer is liable for all taxes, charges and interest due. The employer might likewise be held personally responsible for certain overdue federal taxes.
– If there are any problems with an account, then the IRS will send out correspondence to the employer at the address of record. The IRS strongly suggests that the employer does not change their address of record to that of the payroll provider as it may considerably restrict the company’s ability to be notified of tax matters involving their service.
– Electronic Funds Transfer (EFT) must be utilized to deposit all federal tax deposits. Generally, an EFT is used Electronic Federal Tax Payment System (EFTPS). Employers ought to ensure their payroll providers are utilizing EFTPS, so the employers can verify 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 occasionally confirm payments. A red flag must increase the first time a provider misses out on 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 additional tax payments that their third-party provider is not making on their behalf such as estimated tax payments. There have actually been prosecutions of individuals and companies, who acting under the look of a payroll service provider, have actually stolen funds planned for payment of work taxes.

EFTPS is a secure, accurate, and easy to use service that provides an instant verification for each transaction. This service is used totally free of charge from the U.S. Department of Treasury and allows employers to make and confirm federal tax payments digitally 24 hr a day, 7 days a week through the web or by phone. For more details, companies can enroll online at EFTPS.gov or call EFTPS Customer care at 800-555-4477 for an enrollment kind or to talk to a customer support agent.

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

Employers who think that a bill or notification gotten is an outcome of an issue with their payroll provider 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 visiting a regional IRS workplace. To learn more about IRS notifications, expenses and payment choices, refer to Publication 594, The IRS Collection Process PDF.