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

Many employers contract out some or all their payroll and associated tax tasks to third-party payroll company. Third-party payroll company can streamline company operations and assist fulfill filing due dates and deposit requirements. A few of the services they supply are:

- Administering payroll and work 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 contract out some or all their payroll responsibilities need to consider the following:
  
  - The employer is eventually accountable for the deposit and payment of federal tax liabilities. Although the employer might forward the tax totals up to the third-party to make the tax deposits, the employer 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 company's account. The company is responsible for all taxes, charges and interest due. The employer may also be held personally accountable for particular unpaid federal taxes.
• If there are any problems with an account, then the IRS will send correspondence to the employer at the address of record. The IRS strongly suggests that the employer does not change their address of record to that of the payroll service company as it may considerably restrict the company's ability to be notified of tax matters involving their business.
• Electronic (EFT) should be utilized to transfer all federal tax deposits. Generally, an EFT is used Electronic Federal Tax Payment System (EFTPS). Employers ought to guarantee their payroll providers are using EFTPS, so the employers can validate that payments are being made on their behalf. Employers must register on the EFTPS system to get their own PIN and use this PIN to regularly confirm payments. A red flag should increase the very first time a service supplier misses a payment or makes a late payment. When an employer signs up on EFTPS they will have online access to their payment history for 16 months. In addition, EFTPS permits employers to make any extra tax payments that their third-party company is not making on their behalf such as estimated tax payments. There have actually been prosecutions of people and business, who acting under the appearance of a payroll service company, have actually stolen funds planned for payment of work taxes.
  
  EFTPS is a secure, precise, and easy to use service that provides an immediate verification for each deal. This service is offered 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 information, employers can enlist online at EFTPS.gov or call EFTPS Client service at 800-555-4477 for an enrollment kind or to talk to a client service representative.
  
  Remember, employers are ultimately accountable for the payment of income tax withheld and of both the employer and staff member portions of social security and Medicare taxes.
  
  Employers who think that an expense or notice gotten is a result of a problem with their payroll company need to contact the IRS as soon as possible by calling the number on the expense, writing to the IRS office that sent out the expense, calling 800-829-4933 or going to a local IRS workplace. To find out more about IRS notifications, bills and payment options, describe Publication 594, The IRS Collection Process PDF.