Outsourcing payroll tasks can be a sound organization practice, however ... Know your tax obligations as a company

Many companies contract out some or all their payroll and associated tax tasks to third-party payroll service suppliers. Third-party payroll company can streamline service operations and help meet filing deadlines and deposit requirements. Some of the services they supply are:

- Administering payroll and employment taxes on behalf of the company where the employer provides 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 responsibilities need to think about the following:

- The employer is ultimately accountable for the deposit and payment of federal tax liabilities. Even though the employer may forward the tax totals up to the third-party to make the tax deposits, the employer is the responsible celebration. If the third-party fails to make the federal tax payments, then the IRS might evaluate penalties and interest on the company's account. The company is responsible for all taxes, penalties and interest due. The company may likewise be held personally liable for specific unsettled .

- If there are any concerns with an account, then the IRS will send correspondence to the employer at the address of record. The IRS highly recommends that the company does not change their address of record to that of the payroll provider as it may substantially limit the employer's capability to be notified of tax matters involving their organization.

- Electronic Funds Transfer (EFT) must be utilized to transfer all federal tax deposits. Generally, an EFT is made using Electronic Federal Tax Payment System (EFTPS). Employers ought to guarantee their payroll providers are using EFTPS, so the companies can verify that payments are being made on their behalf. Employers need to sign up on the EFTPS system to get their own PIN and utilize this PIN to regularly confirm payments. A red flag must go up the very first time a service supplier misses out on 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 allows employers to make any additional tax payments that their third-party provider is not making on their behalf such as estimated tax payments. There have been prosecutions of individuals and business, who acting under the look of a payroll service provider, have taken funds intended for payment of work taxes.

EFTPS is a secure, precise, and simple to utilize service that supplies an immediate confirmation for each deal. This service is offered complimentary of charge from the U.S. Department of Treasury and allows employers to make and validate federal tax payments electronically 24 hours a day, 7 days a week through the web or by phone. To learn more, companies can enlist online at EFTPS.gov or call EFTPS Customer care at 800-555-4477 for an enrollment form or to speak to a client service representative.

Remember, companies 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 think that a bill or notification received is an outcome of a problem with their payroll provider must contact the IRS as soon as possible by calling the number on the bill, writing to the IRS office that sent the bill, calling 800-829-4933 or checking out a local IRS workplace. For more details about IRS notifications, bills and payment choices, refer to Publication 594, The IRS Collection Process PDF.