Outsourcing Payroll Duties
Outsourcing payroll duties can be a sound company practice, but … Know your tax responsibilities as a company
Many employers contract out some or all their payroll and associated tax responsibilities to third-party payroll company. Third-party payroll company can improve business operations and assist meet filing deadlines and deposit requirements. Some of the services they supply are:
– Administering payroll and employment taxes on behalf of the employer where the employer offers the funds at first to the third-party.
– Reporting, collecting and transferring work taxes with state and federal authorities.
Employers who outsource some or all their payroll responsibilities must think about the following:
– The employer is ultimately accountable for the deposit and payment of federal tax liabilities. Although 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 fails to make the federal tax payments, then the IRS might evaluate penalties and interest on the employer’s account. The employer is liable for all taxes, penalties and interest due. The employer may also be held personally accountable for certain unsettled federal taxes.
– If there are any issues with an account, then the IRS will send correspondence to the company at the address of record. The IRS strongly suggests that the employer does not alter their address of record to that of the payroll company as it might substantially restrict the employer’s ability to be informed of tax matters including their business.
– Electronic Funds Transfer (EFT) should be utilized to deposit all federal tax deposits. Generally, an EFT is used Electronic Federal Tax Payment System (EFTPS). Employers need to guarantee their payroll companies are utilizing EFTPS, so the employers can verify that payments are being made on their behalf. Employers ought to register on the EFTPS system to get their own PIN and utilize this PIN to occasionally validate payments. A warning should increase the very first time a service supplier 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 enables companies to make any extra tax payments that their third-party company is not making on their behalf such as approximated tax payments. There have been prosecutions of people and business, who acting under the look of a company, have taken funds intended for payment of work taxes.
EFTPS is a secure, precise, and simple to use service that provides an immediate confirmation for each transaction. This service is provided free of charge from the U.S. Department of Treasury and allows companies to make and validate federal tax payments electronically 24 hours a day, 7 days a week through the web or by phone. To find out more, employers can enlist online at EFTPS.gov or call EFTPS Customer care at 800-555-4477 for an enrollment type or to talk with a customer support representative.
Remember, companies are eventually responsible for the payment of income 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 gotten is a result of a problem with their payroll provider need to get in touch with the IRS as soon as possible by calling the number on the bill, composing to the IRS office that sent out the expense, calling 800-829-4933 or visiting a regional IRS workplace. For more information about IRS notifications, costs and payment choices, refer to Publication 594, The IRS Collection Process PDF.
