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

Many companies outsource some or all their payroll and related tax responsibilities to third-party payroll company. Third-party companies can streamline service operations and help satisfy filing due dates and deposit requirements. Some of the services they provide are:

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

• Reporting, gathering and transferring work taxes with state and federal authorities.
  
  Employers who contract out some or all their payroll obligations should consider the following:
  
  - The employer is eventually responsible for the deposit and payment of federal tax liabilities. Even though the company may forward the tax amounts to the third-party to make the tax deposits, the company is the responsible celebration. If the third-party stops working to make the federal tax payments, then the IRS may evaluate charges and interest on the employer's account. The company is liable for all taxes, penalties and interest due. The company may also be held personally liable for specific unpaid federal taxes.
• If there are any problems with an account, then the IRS will send out correspondence to the company at the address of record. The IRS highly recommends that the employer does not change their address of record to that of the payroll service supplier as it may substantially restrict the employer's capability to be informed of tax matters including their company.
• Electronic Funds Transfer (EFT) need to be utilized to transfer all federal tax deposits. Generally, an EFT is used Electronic Federal Tax Payment System (EFTPS). Employers must guarantee their payroll suppliers are using EFTPS, so the companies can confirm that payments are being made on their behalf. Employers ought to sign up on the EFTPS system to get their own PIN and utilize this PIN to regularly confirm payments. A red flag needs to go up the first time a service supplier 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 permits companies to make any additional 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 companies, who acting under the appearance of a payroll provider, have actually taken funds planned for payment of employment taxes.
  
  EFTPS is a safe and secure, accurate, and easy to use service that provides an immediate confirmation for each deal. This service is used complimentary of charge from the U.S. Department of Treasury and allows companies to make and verify federal tax payments electronically 24 hours 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 form or to speak to a customer support representative.
  
  Remember, employers 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 believe that an expense or notification received is a result of a problem with their payroll provider must contact the IRS as soon as possible by calling the number on the costs, composing to the IRS workplace that sent the expense, calling 800-829-4933 or going to a local IRS office. For more details about IRS notices, bills and payment options, refer to Publication 594, The IRS Collection Process PDF.