29sixservices

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

Many employers contract out some or all their payroll and related tax duties to third-party payroll company. Third-party payroll company can enhance service operations and assist meet filing due dates and deposit requirements. Some of the services they provide are:

- Administering payroll and employment taxes on behalf of the employer where the company supplies the funds at first to the third-party.

Reporting, collecting and transferring work taxes with state and federal authorities.

Employers who contract out some or all their payroll obligations ought to consider the following:

- The company is eventually responsible for the deposit and payment of federal tax liabilities. Even though the employer 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 examine penalties and interest on the company's account. The employer is accountable for all taxes, and interest due. The company might also be held personally liable for particular unpaid 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 strongly recommends that the employer does not change their address of record to that of the payroll provider as it may significantly limit the employer's ability to be notified of tax matters including their organization.
Electronic Funds Transfer (EFT) should be used 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 utilizing EFTPS, so the employers can confirm 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 regularly validate payments. A warning must go up the first time a provider 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 extra tax payments that their third-party service provider is not making on their behalf such as approximated tax payments. There have been prosecutions of individuals and business, who acting under the appearance of a payroll company, have stolen funds meant for payment of employment taxes.

EFTPS is a secure, accurate, and simple to use service that provides an immediate verification for each transaction. This service is used totally free 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 internet or by phone. For more details, employers can enroll online at EFTPS.gov or call EFTPS Customer Service at 800-555-4477 for an enrollment form or to talk with a customer support agent.

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

Employers who think that an expense or notification gotten is an outcome of an issue with their payroll service supplier must call the IRS as quickly as possible by calling the number on the costs, writing to the IRS office that sent the bill, calling 800-829-4933 or going to a regional IRS office. For more details about IRS notices, costs and payment alternatives, describe Publication 594, The IRS Collection Process PDF.