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

Many companies outsource some or all their payroll and associated tax tasks to third-party payroll provider. Third-party payroll provider can simplify service operations and assist fulfill filing due dates and deposit requirements. Some of the services they supply are:

- Administering payroll and employment taxes on behalf of the company where the employer supplies the funds initially to the third-party.

• Reporting, collecting 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 ultimately responsible for the deposit and payment of federal tax liabilities. Even though the company might forward the tax totals up to the to make the tax deposits, the employer is the accountable party. If the third-party fails to make the federal tax payments, then the IRS might assess charges and interest on the company's account. The company is accountable for all taxes, charges and interest due. The company may also be held personally responsible for certain overdue 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 recommends that the company does not alter their address of record to that of the payroll provider as it may significantly restrict the employer's ability to be notified of tax matters including their business.
• Electronic Funds Transfer (EFT) must be utilized to deposit all federal tax deposits. Generally, an EFT is used Electronic Federal Tax Payment System (EFTPS). Employers should guarantee their payroll providers are using EFTPS, so the companies can validate that payments are being made on their behalf. Employers must register on the EFTPS system to get their own PIN and utilize this PIN to regularly validate payments. A warning should go up the very first time a provider misses out on a payment or makes a late payment. When an employer signs up on EFTPS they will have on-line access to their payment history for 16 months. In addition, EFTPS enables 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 actually taken funds planned for payment of employment taxes.
  
  EFTPS is a safe, accurate, and simple to utilize service that supplies an immediate confirmation for each deal. This service is used totally free of charge from the U.S. Department of Treasury and allows employers to make and validate federal tax payments electronically 24 hr a day, 7 days a week through the internet or by phone. To learn more, employers can enroll online at EFTPS.gov or call EFTPS Client service at 800-555-4477 for an enrollment kind or to speak with a consumer service representative.
  
  Remember, companies are eventually accountable for the payment of income tax kept and of both the employer and staff member parts of social security and Medicare taxes.
  
  Employers who think that a bill or notification received is a result of a problem with their payroll provider need to contact the IRS as quickly as possible by calling the number on the bill, composing to the IRS workplace that sent out the costs, calling 800-829-4933 or going to a regional IRS workplace. For more information about IRS notifications, costs and payment alternatives, refer to Publication 594, The IRS Collection Process PDF.