Outsourcing Payroll Duties Outsourcing payroll responsibilities can be a sound company practice, however … Know your tax duties as a company Many companies outsource some or all their payroll and related tax responsibilities to third-party payroll company. Third-party payroll service providers can streamline company operations and assist satisfy filing deadlines and deposit requirements. Some of the services they supply are: – Administering payroll and work taxes on behalf of the employer where the company provides the funds at first to the third-party. – Reporting, collecting and transferring employment taxes with state and federal authorities. Employers who contract out some or all their payroll obligations must consider the following: – The employer is ultimately responsible for the deposit and payment of federal tax liabilities. Even though the employer might forward the tax amounts 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 penalties and interest on the employer’s account. The employer is accountable for all taxes, penalties and interest due. The employer might also be held personally responsible for certain overdue 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 that the employer does not change their address of record to that of the payroll provider as it may significantly restrict the employer’s capability to be informed of tax matters involving their company. – Electronic Funds Transfer (EFT) should be utilized to deposit all federal tax deposits. Generally, an EFT is made using Electronic Federal Tax Payment System (EFTPS). Employers need to guarantee their payroll companies are utilizing EFTPS, so the companies can validate 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 needs to increase the very first time a company misses out on a payment or makes a late payment. When an employer signs up on EFTPS they will have on-line access to their payment history for 16 months. In addition, EFTPS enables 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 companies, who acting under the look of a payroll provider, have stolen funds meant for payment of employment taxes. EFTPS is a secure, accurate, and easy to use service that provides an instant confirmation for each deal. This service is used free of charge from the U.S. Department of Treasury and enables employers to make and validate federal tax payments electronically 24 hr a day, 7 days a week through the web or by phone. For additional information, companies can enlist online at EFTPS.gov or call EFTPS Customer support at 800-555-4477 for an enrollment kind or to speak with a customer care agent. Remember, employers are ultimately accountable for the payment of income tax kept 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 a result of a problem with their payroll service provider must call the IRS as soon as possible by calling the number on the costs, composing to the IRS office that sent out the bill, calling 800-829-4933 or visiting a local IRS office. For more information about IRS notices, bills and payment alternatives, describe Publication 594, The IRS Collection Process PDF.