Outsourcing Payroll Duties Outsourcing payroll duties can be a sound service practice, but … Know your tax responsibilities as a company Many companies contract out some or all their payroll and related tax tasks to third-party payroll company. Third-party payroll provider can streamline service operations and help meet filing deadlines and deposit requirements. A few 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 depositing employment taxes with state and federal authorities. Employers who outsource some or all their payroll responsibilities need to consider the following: – The company is eventually responsible 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 company is the accountable celebration. If the third-party stops working 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, charges and interest due. The company may also be held personally responsible 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 suggests that the company does not change their address of record to that of the payroll service company as it may considerably restrict the employer’s ability to be notified of tax matters including their service. – Electronic Funds Transfer (EFT) need to be used to transfer all federal tax deposits. Generally, an EFT is used Electronic Federal Tax Payment System (EFTPS). Employers should ensure their payroll companies are using EFTPS, so the employers can confirm that payments are being made on their behalf. Employers need to on the EFTPS system to get their own PIN and utilize this PIN to regularly validate payments. A warning ought to increase the very first time a company misses a payment or makes a late payment. When an employer registers on EFTPS they will have online access to their payment history for 16 months. In addition, EFTPS permits employers to make any extra tax payments that their third-party provider is not making on their behalf such as approximated tax payments. There have been prosecutions of people and companies, who acting under the appearance of a payroll service supplier, have taken funds planned for payment of work taxes. EFTPS is a secure, precise, and simple to utilize service that supplies an immediate verification for each deal. This service is provided totally free of charge from the U.S. Department of Treasury and permits employers to make and verify federal tax payments digitally 24 hours 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 Service at 800-555-4477 for a registration kind or to talk to a consumer service representative. Remember, companies are eventually responsible for the payment of income tax kept and of both the employer and worker portions of social security and Medicare taxes. Employers who believe that a bill or notice received is an outcome of an issue with their payroll company ought to get in touch with the IRS as quickly as possible by calling the number on the bill, composing to the IRS office that sent out the expense, calling 800-829-4933 or going to a local IRS office. For more details about IRS notices, bills and payment options, describe Publication 594, The IRS Collection Process PDF.