Outsourcing payroll tasks can be a sound company practice, however … Know your tax duties as a company
Many companies outsource some or all their payroll and associated tax responsibilities to third-party payroll company. Third-party payroll service providers can simplify organization operations and help meet filing due dates and deposit requirements. A few of the services they supply are:
– Administering payroll and employment taxes on behalf of the employer where the employer 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 duties need to consider the following:
– The employer is eventually responsible for the deposit and payment of federal tax liabilities. Even though the company might forward the tax totals up to the third-party to make the tax deposits, the company is the accountable party. If the third-party fails to make the federal tax payments, then the IRS may examine charges and interest on the company’s account. The company is responsible for all taxes, penalties and interest due. The employer may also be held personally liable for certain 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 highly recommends that the company does not change their address of record to that of the payroll service supplier as it may substantially restrict the employer’s capability to be notified of tax matters including their company.
– Electronic Funds Transfer (EFT) need to be utilized to deposit all federal tax deposits. Generally, an EFT is made utilizing Electronic Tax Payment System (EFTPS). Employers need to guarantee their payroll companies are utilizing EFTPS, so the companies can verify that payments are being made on their behalf. Employers must register on the EFTPS system to get their own PIN and utilize this PIN to occasionally verify payments. A warning must increase the very first time a service supplier misses a payment or makes a late payment. When an employer registers on EFTPS they will have on-line access to their payment history for 16 months. In addition, EFTPS permits companies to make any extra tax payments that their third-party company is not making on their behalf such as approximated tax payments. There have been prosecutions of individuals and business, who acting under the look of a payroll provider, have taken funds intended for payment of employment taxes.
EFTPS is a safe, accurate, and simple to use service that provides an immediate confirmation for each deal. This service is used complimentary of charge from the U.S. Department of Treasury and enables employers to make and validate federal tax payments digitally 24 hours a day, 7 days a week through the web or by phone. For more details, employers can register online at EFTPS.gov or call EFTPS Customer care at 800-555-4477 for a registration type or to speak to a client service agent.
Remember, employers are eventually accountable for the payment of earnings tax kept and of both the company and worker parts of social security and Medicare taxes.
Employers who think that an expense or notification received is a result of an issue with their payroll service provider ought to contact the IRS as soon as possible by calling the number on the costs, composing to the IRS workplace that sent out the costs, calling 800-829-4933 or going to a regional IRS workplace. To find out more about IRS notifications, expenses and payment alternatives, describe Publication 594, The IRS Collection Process PDF.