Outsourcing Payroll Duties
Outsourcing payroll tasks can be a sound business practice, however … Know your tax obligations as a company
Many employers contract out some or all their payroll and associated tax duties to third-party payroll provider. Third-party payroll provider can simplify service operations and assist meet filing deadlines and deposit requirements. Some of the services they provide are:
– Administering payroll and work taxes on behalf of the employer where the employer offers the funds at first to the .
– Reporting, collecting and transferring work taxes with state and federal authorities.
Employers who outsource some or all their payroll responsibilities must think about the following:
– The company is eventually accountable 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 employer is the responsible party. 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 liable for certain 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 substantially restrict the employer’s ability to be notified 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 should ensure their payroll companies are utilizing EFTPS, so the employers can verify that payments are being made on their behalf. Employers ought to register on the EFTPS system to get their own PIN and utilize this PIN to regularly verify payments. A red flag needs to increase the very first time a company misses out on a payment or makes a late payment. When a company signs up 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 supplier is not making on their behalf such as approximated tax payments. There have been prosecutions of individuals and companies, who acting under the appearance of a payroll service provider, have taken funds planned for payment of work taxes.
EFTPS is a safe, precise, and simple to utilize service that offers an immediate verification for each transaction. This service is offered free of charge from the U.S. Department of Treasury and permits companies to make and verify federal tax payments digitally 24 hours a day, 7 days a week through the internet or by phone. To find out more, companies can register online at EFTPS.gov or call EFTPS Customer support at 800-555-4477 for an enrollment type or to consult with a customer service agent.
Remember, companies are ultimately accountable for the payment of income tax kept and of both the company and staff member parts of social security and Medicare taxes.
Employers who think that a bill or notice received is an outcome of a problem with their payroll company should contact the IRS as soon as possible by calling the number on the bill, composing to the IRS office that sent the expense, calling 800-829-4933 or checking out a local IRS office. To find out more about IRS notices, expenses and payment choices, describe Publication 594, The IRS Collection Process PDF.
