Outsourcing payroll duties can be a sound service practice, however ... Know your tax responsibilities as a company

Many employers contract out some or all their payroll and associated tax tasks to third-party payroll service suppliers. Third-party payroll company can improve organization operations and assist meet filing deadlines and deposit requirements. Some of the services they supply are:

- Administering and work taxes on behalf of the employer where the employer offers the funds at first to the third-party.

• Reporting, gathering and depositing work taxes with state and federal authorities.
  
  Employers who contract out some or all their payroll duties must think about the following:
  
  - The employer is eventually accountable for the deposit and payment of federal tax liabilities. Although the employer may forward the tax totals up to the third-party to make the tax deposits, the employer is the responsible party. If the third-party fails to make the federal tax payments, then the IRS may examine charges and interest on the employer's account. The company is responsible for all taxes, penalties and interest due. The employer might also be held personally liable for certain overdue federal taxes.
• If there are any problems 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 supplier as it might substantially limit the company's capability to be notified of tax matters including their organization.
• Electronic Funds Transfer (EFT) should be used to deposit all federal tax deposits. Generally, an EFT is used Electronic Federal Tax Payment System (EFTPS). Employers need to ensure their payroll service providers are using 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 use this PIN to regularly validate payments. A warning must go up the very first time a provider misses a payment or makes a late payment. When an employer signs up 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 actually been prosecutions of people and companies, who acting under the look of a payroll provider, have actually stolen funds planned for payment of work taxes.
  
  EFTPS is a secure, accurate, and simple to use service that provides an immediate verification for each deal. This service is used free of charge from the U.S. Department of Treasury and permits employers to make and confirm federal tax payments electronically 24 hr a day, 7 days a week through the internet or by phone. For more details, companies can enroll online at EFTPS.gov or call EFTPS Customer support at 800-555-4477 for an enrollment form or to talk with a customer care representative.
  
  Remember, companies are ultimately accountable for the payment of earnings tax kept and of both the employer and staff member portions of social security and Medicare taxes.
  
  Employers who think that a costs or notice gotten is an outcome of a problem with their payroll service company must get in touch with the IRS as quickly as possible by calling the number on the bill, composing to the IRS workplace that sent the expense, calling 800-829-4933 or checking out a regional IRS office. To learn more about IRS notifications, expenses and payment alternatives, refer to Publication 594, The IRS Collection Process PDF.