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

Many companies outsource some or all their payroll and associated tax tasks to third-party payroll provider. Third-party payroll company can streamline service operations and help meet filing deadlines and deposit requirements. A few of the services they offer are:

- Administering payroll and work taxes on behalf of the employer where the employer offers 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 ought to consider the following:
  
  - The company is eventually responsible for the deposit and payment of federal tax liabilities. Despite the fact that the employer may forward the tax totals up to the third-party to make the tax deposits, the employer is the accountable celebration. If the third-party stops working to make the federal tax payments, then the IRS might evaluate charges and interest on the company's account. The company is accountable for all taxes, penalties and interest due. The company might also be held personally liable for specific unpaid 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 suggests that the employer does not change their address of record to that of the payroll provider as it might considerably restrict the employer's capability to be informed of tax matters involving their company.
• Electronic Funds Transfer (EFT) should be used to transfer all federal tax deposits. Generally, an EFT is made using Electronic Federal Tax Payment System (EFTPS). Employers should ensure their payroll companies are utilizing EFTPS, so the companies can validate 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 occasionally confirm payments. A warning must increase the very first time a service provider misses out on a payment or makes a late payment. When a company registers on EFTPS they will have on-line access to their payment history for 16 months. In addition, EFTPS allows employers to make any additional tax payments that their third-party company is not making on their behalf such as estimated tax payments. There have actually been prosecutions of individuals and companies, who acting under the appearance of a payroll company, have stolen funds planned for payment of work taxes.
  
  EFTPS is a protected, accurate, and simple to utilize service that supplies an instant verification for each transaction. This service is offered free of charge from the U.S. Department of Treasury and allows companies to make and validate federal tax payments electronically 24 hr a day, 7 days a week through the internet or by phone. To find out more, companies can enroll online at EFTPS.gov or call EFTPS Client service at 800-555-4477 for an enrollment type or to speak with a customer service representative.
  
  Remember, employers are ultimately accountable for the payment of income tax withheld and of both the employer and staff member parts of social security and Medicare taxes.
  
  Employers who believe that a bill or notice received is an outcome of a problem with their should call the IRS as quickly as possible by calling the number on the expense, writing to the IRS office that sent the expense, calling 800-829-4933 or checking out a regional IRS office. To learn more about IRS notices, expenses and payment choices, describe Publication 594, The IRS Collection Process PDF.