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

Many employers contract out some or all their payroll and associated tax tasks to third-party payroll provider. Third-party payroll service suppliers can streamline company operations and help due dates and deposit requirements. A few of the services they provide are:

- Administering payroll and employment taxes on behalf of the employer where the employer provides the funds initially to the third-party.

• Reporting, gathering and transferring employment taxes with state and federal authorities.
  
  Employers who outsource some or all their payroll obligations should consider the following:
  
  - The company is eventually responsible for the deposit and payment of federal tax liabilities. Although the employer might forward the tax amounts to the third-party to make the tax deposits, the company is the responsible party. If the third-party stops working to make the federal tax payments, then the IRS may evaluate penalties and interest on the employer's account. The company is responsible for all taxes, penalties and interest due. The company might likewise be held personally accountable for certain 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 service company as it might considerably limit the employer's capability to be informed of tax matters including their company. - Electronic Funds Transfer (EFT) should be utilized to transfer all federal tax deposits. Generally, an EFT is used Electronic Federal Tax Payment System (EFTPS). Employers must guarantee their payroll companies are utilizing EFTPS, so the employers 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 use this PIN to periodically validate payments. A warning must go up the very first time a provider misses out on a payment or makes a late payment. When a company registers on EFTPS they will have on-line access to their payment history for 16 months. In addition, EFTPS enables companies to make any additional tax payments that their third-party company is not making on their behalf such as approximated tax payments. There have actually been prosecutions of people and business, who acting under the appearance of a payroll company, have actually stolen funds meant for payment of work taxes.
  
  EFTPS is a secure, accurate, and simple to use service that supplies an immediate verification for each transaction. This service is used complimentary of charge from the U.S. Department of Treasury and enables companies to make and confirm federal tax payments digitally 24 hr a day, 7 days a week through the internet or by phone. For more details, companies can enlist online at EFTPS.gov or call EFTPS Customer support at 800-555-4477 for an enrollment kind or to talk with a customer care representative.
  
  Remember, companies are ultimately accountable for the payment of income tax withheld and of both the company and employee parts of social security and Medicare taxes.
  
  Employers who believe that a bill or notice gotten is an outcome of an issue with their payroll company should contact the IRS as quickly as possible by calling the number on the expense, writing to the IRS office that sent out the costs, calling 800-829-4933 or going to a local IRS workplace. To find out more about IRS notifications, bills and payment options, describe Publication 594, The IRS Collection Process PDF.