Outsourcing payroll duties can be a sound organization practice, but ... Know your tax responsibilities as an employer

Many companies outsource some or all their payroll and related tax responsibilities to third-party payroll company. Third-party payroll service companies can simplify business operations and assist meet filing deadlines and deposit requirements. Some of the services they offer are:

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

• Reporting, gathering and depositing work taxes with state and federal authorities.
  
  Employers who outsource some or all their payroll duties need to think about the following:
  
  - The employer is eventually responsible for the deposit and payment of federal tax liabilities. Although the company may forward the tax totals up 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 might evaluate charges and interest on the employer's account. The employer is responsible for all taxes, charges 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 employer does not change their address of record to that of the payroll company as it may considerably restrict the company's ability to be informed of tax matters including their service.
• Electronic Funds Transfer (EFT) need to be utilized to transfer all federal tax deposits. Generally, an EFT is made using Electronic Federal Tax Payment System (EFTPS). Employers ought to ensure their payroll providers are using EFTPS, so the employers can verify that payments are being made on their behalf. Employers should register on the EFTPS system to get their own PIN and utilize this PIN to regularly verify payments. A red flag must go up the first time a provider misses a payment or makes a late payment. When a company signs up on EFTPS they will have online access to their payment history for 16 months. In addition, EFTPS allows companies to make any extra tax payments that their third-party provider is not making on their behalf such as approximated tax payments. There have actually been prosecutions of individuals and business, who acting under the appearance of a payroll company, have taken funds planned for payment of work taxes.
  
  EFTPS is a safe, accurate, and simple to use service that provides an immediate confirmation for each deal. This service is offered free of charge from the U.S. Department of Treasury and enables employers to make and confirm federal tax payments electronically 24 hours a day, 7 days a week through the internet or by phone. For more details, employers can enlist online at EFTPS.gov or call EFTPS Customer Service at 800-555-4477 for a registration type or to talk to a customer care agent.
  
  Remember, companies are ultimately accountable for the payment of earnings tax withheld and of both the company and employee parts of social security and Medicare taxes.
  
  Employers who believe that a costs or notification gotten is a result of a problem with their should call the IRS as quickly as possible by calling the number on the costs, writing to the IRS workplace that sent the bill, calling 800-829-4933 or visiting a local IRS workplace. To learn more about IRS notifications, bills and payment choices, refer to Publication 594, The IRS Collection Process PDF.