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Outsourcing Payroll Duties

Outsourcing payroll tasks can be a sound company practice, however … Know your tax obligations as a company

Many employers outsource some or all their payroll and associated tax responsibilities to third-party payroll provider. Third-party payroll service providers can enhance organization operations and help meet filing deadlines and deposit requirements. A few of the services they offer are:

– Administering payroll and employment taxes on behalf of the company where the company offers the funds initially to the third-party.
– Reporting, collecting and transferring work taxes with state and federal authorities.

Employers who outsource some or all their payroll obligations must think about 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 amounts 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 examine penalties and interest on the employer’s account. The employer is liable for all taxes, charges and interest due. The company may also be held personally accountable for particular unpaid federal taxes.
– If there are any problems with an account, then the IRS will send out correspondence to the employer at the address of record. The IRS strongly suggests that the employer does not alter their address of record to that of the payroll company as it might considerably limit the company’s capability to be notified of tax matters including their organization.
– Electronic Funds Transfer (EFT) must be used to transfer all federal tax deposits. Generally, an EFT is made utilizing Electronic Federal Tax Payment System (EFTPS). Employers ought to guarantee their payroll service providers are utilizing EFTPS, so the employers can verify that payments are being made on their behalf. Employers need to sign up on the EFTPS system to get their own PIN and utilize this PIN to occasionally confirm payments. A warning should go up the very first time a company misses out on a payment or makes a late payment. When an employer registers 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 is not making on their behalf such as approximated tax payments. There have actually been prosecutions of individuals and companies, who acting under the appearance of a payroll service company, have actually taken funds intended for payment of work taxes.

EFTPS is a safe and secure, precise, and simple to utilize service that provides an instant verification for each deal. This service is used totally free of charge from the U.S. Department of Treasury and allows companies to make and confirm federal tax payments electronically 24 hr a day, 7 days a week through the web or by phone. For more details, employers can enlist online at EFTPS.gov or call EFTPS Customer support at 800-555-4477 for an enrollment kind or to talk with a customer care representative.

Remember, employers are ultimately accountable for the payment of earnings tax withheld and of both the employer and staff member parts of social security and Medicare taxes.

Employers who believe that a costs or notification received is a result of an issue with their payroll service provider need to call the IRS as quickly as possible by calling the number on the bill, composing to the IRS office that sent out the costs, calling 800-829-4933 or checking out a regional IRS workplace. For more details about IRS notifications, bills and payment alternatives, describe Publication 594, The IRS Collection Process PDF.