Outsourcing payroll duties can be a sound business practice, but ... Know your tax obligations as a company

Many employers outsource some or all their payroll and associated tax responsibilities to third-party payroll service providers. Third-party payroll company can simplify organization operations and help fulfill filing deadlines and deposit requirements. A few of the services they supply are:

- Administering payroll and employment taxes on behalf of the employer where the company supplies the funds initially 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 company is eventually responsible for the deposit and of federal tax liabilities. Despite the fact that the employer might forward the tax totals up to the third-party to make the tax deposits, the company is the accountable celebration. If the third-party stops working to make the federal tax payments, then the IRS may assess charges and interest on the employer's account. The employer is accountable for all taxes, penalties and interest due. The company might also be held personally accountable for specific unpaid 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 recommends that the company does not alter their address of record to that of the payroll company as it might considerably restrict the company's capability to be informed of tax matters including their business.
• Electronic Funds Transfer (EFT) need to be utilized to transfer all federal tax deposits. Generally, an EFT is used Electronic Federal Tax Payment System (EFTPS). Employers must ensure their payroll suppliers 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 use this PIN to regularly verify payments. A red flag needs to increase the first time a service provider misses a payment or makes a late payment. When an employer signs up 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 company is not making on their behalf such as estimated tax payments. There have been prosecutions of people and business, who acting under the look of a payroll company, have taken funds intended for payment of employment taxes.
  
  EFTPS is a secure, precise, and simple to utilize service that offers an instant verification for each transaction. This service is offered free of charge from the U.S. Department of Treasury and permits employers to make and validate federal tax payments digitally 24 hr a day, 7 days a week through the web or by phone. To find out more, employers can enroll online at EFTPS.gov or call EFTPS Customer care at 800-555-4477 for an enrollment kind or to consult with a client service representative.
  
  Remember, companies are ultimately accountable for the payment of income tax kept and of both the company and worker parts of social security and Medicare taxes.
  
  Employers who think that a costs or notice gotten is an outcome of an issue with their payroll service supplier need to contact the IRS as quickly as possible by calling the number on the costs, composing to the IRS workplace that sent out the costs, calling 800-829-4933 or checking out a local IRS workplace. For additional information about IRS notices, expenses and payment alternatives, describe Publication 594, The IRS Collection Process PDF.