Outsourcing payroll responsibilities can be a sound organization practice, however ... Know your tax responsibilities as an employer

Many employers contract out some or all their payroll and related tax tasks to third-party payroll provider. Third-party payroll service suppliers can enhance company 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 company where the company supplies the funds initially to the third-party.
- Reporting, collecting and depositing employment taxes with state and federal authorities.

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

- The company 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 might evaluate penalties and interest on the employer's account. The company is accountable for all taxes, charges and interest due. The company might also be held personally accountable for particular overdue federal taxes.
- If there are any issues with an account, then the IRS will send out correspondence to the company at the address of record. The IRS strongly recommends that the company does not alter their address of record to that of the payroll provider as it might considerably restrict the company's capability to be informed of tax matters including their organization.
- Electronic Funds Transfer (EFT) should be utilized to deposit all federal tax deposits. Generally, an EFT is made utilizing Electronic Federal Tax Payment System (EFTPS). Employers ought to ensure their payroll providers are utilizing EFTPS, so the employers can confirm 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 validate payments. A warning needs to increase the first time a company misses a payment or makes a late payment. When an employer signs up on EFTPS they will have on-line 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 approximated tax payments. There have been prosecutions of people and companies, who acting under the look of a payroll company, have taken funds intended for payment of employment taxes.

EFTPS is a protected, accurate, and simple to utilize service that provides an instant verification for each transaction. This service is provided complimentary of charge from the U.S. Department of Treasury and permits companies to make and validate federal tax payments digitally 24 hr a day, 7 days a week through the web or by phone. To learn more, employers can enroll online at EFTPS.gov or call EFTPS Customer Service at 800-555-4477 for a registration kind or to talk with a client service agent.

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

Employers who believe that a bill or notification received 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 office that sent out the bill, calling 800-829-4933 or going to a local IRS workplace. To learn more about IRS notifications, expenses and payment alternatives, refer to Publication 594, The IRS Collection Process PDF.