Outsourcing Payroll Duties

Outsourcing payroll duties can be a sound organization practice, but … Know your tax responsibilities as an employer
Many employers outsource some or all their payroll and associated tax responsibilities to third-party payroll provider. Third-party payroll provider can improve company operations and help satisfy filing due dates and deposit requirements. Some of the services they offer are:
– Administering payroll and employment taxes on behalf of the company where the company provides the funds at first to the third-party.
– Reporting, collecting and transferring employment taxes with state and federal authorities.
Employers who contract out some or all their payroll responsibilities should think about the following:
– The employer is ultimately responsible for the deposit and payment of federal tax liabilities. Despite the fact that the employer might forward the tax amounts to the third-party to make the tax deposits, the employer is the accountable party. If the third-party fails to make the federal tax payments, then the IRS may evaluate penalties and interest on the . The employer is liable for all taxes, penalties and interest due. The company may also be held personally liable for specific unsettled 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 suggests that the company does not change their address of record to that of the payroll service supplier as it might considerably limit the employer’s ability to be informed of tax matters including their business.
– Electronic Funds Transfer (EFT) must be used to transfer all federal tax deposits. Generally, an EFT is made utilizing Electronic Federal Tax Payment System (EFTPS). Employers need to guarantee their payroll providers are using EFTPS, so the employers can verify 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 periodically validate payments. A red flag should increase the very first time a provider misses a payment or makes a late payment. When an employer registers on EFTPS they will have online access to their payment history for 16 months. In addition, EFTPS enables companies to make any additional tax payments that their third-party service provider is not making on their behalf such as approximated tax payments. There have actually been prosecutions of individuals and business, who acting under the appearance of a payroll company, have taken funds meant for payment of employment taxes.
EFTPS is a safe and secure, accurate, and simple to use service that provides an immediate confirmation for each transaction. This service is offered totally free of charge from the U.S. Department of Treasury and permits companies to make and verify federal tax payments electronically 24 hr a day, 7 days a week through the internet or by phone. For more information, companies can enlist online at EFTPS.gov or call EFTPS Customer care at 800-555-4477 for an enrollment form or to speak with a customer care representative.
Remember, employers are eventually accountable for the payment of earnings 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 gotten is an outcome of a problem with their payroll service provider ought to get in touch with the IRS as soon as possible by calling the number on the costs, composing to the IRS office that sent the bill, calling 800-829-4933 or going to a local IRS workplace. To learn more about IRS notifications, costs and payment options, refer to Publication 594, The IRS Collection Process PDF.