Outsourcing payroll tasks can be a sound business practice, but … Know your tax obligations as a company
Many companies outsource some or all their payroll and associated tax duties to third-party payroll company. Third-party payroll service companies can enhance company operations and help fulfill filing due dates and deposit requirements. Some of the services they provide are:
– Administering payroll and work taxes on behalf of the employer where the company provides the funds initially to the third-party.
– Reporting, gathering and depositing work taxes with state and federal authorities.
Employers who outsource some or all their payroll duties ought to 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 responsible party. If the third-party stops working to make the federal tax payments, then the IRS may evaluate penalties and interest on the company’s account. The employer is accountable for all taxes, penalties and interest due. The company may likewise be held personally responsible for particular overdue federal taxes.
– If there are any issues with an account, then the IRS will send correspondence to the employer at the address of record. The IRS highly recommends that the employer does not alter their address of record to that of the payroll provider as it might significantly limit the employer’s ability to be informed of tax matters involving their service.
– Electronic Funds Transfer (EFT) need to be utilized to deposit all federal tax deposits. Generally, an EFT is used Electronic Federal Tax Payment System (EFTPS). Employers must ensure their payroll providers are using EFTPS, so the employers can validate that payments are being made on their behalf. Employers must sign up on the EFTPS system to get their own PIN and utilize this PIN to occasionally verify payments. A warning ought to go up the very 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 allows employers to make any extra tax payments that their third-party provider is not making on their behalf such as approximated tax payments. There have actually been prosecutions of people and business, who acting under the appearance of a payroll company, have stolen funds meant for payment of employment taxes.
EFTPS is a safe, accurate, and easy to use service that provides an instant verification for each transaction. This service is used complimentary of charge from the U.S. Department of Treasury and allows employers to make and validate federal tax payments digitally 24 hours a day, 7 days a week through the internet or by phone. For more details, companies can enlist online at EFTPS.gov or call EFTPS Customer Service at 800-555-4477 for an enrollment kind or to consult with a customer care representative.
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 .
Employers who think that a bill or notice gotten is an outcome of an issue with their payroll service company ought to call the IRS as quickly as possible by calling the number on the bill, composing to the IRS office that sent the bill, calling 800-829-4933 or checking out a regional IRS workplace. For more info about IRS notifications, expenses and payment options, describe Publication 594, The IRS Collection Process PDF.