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

Many employers outsource some or all their payroll and related tax responsibilities to third-party payroll provider. Third-party payroll provider can improve organization operations and assist satisfy filing deadlines and deposit requirements. A few of the services they provide are:

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

Reporting, gathering and depositing work taxes with state and federal authorities.

Employers who outsource some or all their payroll obligations should think about the following:

- The employer is ultimately responsible for the deposit and payment of federal tax liabilities. Although the company 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 fails to make the federal tax payments, then the IRS might assess penalties and interest on the company's account. The employer is accountable for all taxes, charges and interest due. The company might likewise be held personally accountable for specific overdue 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 recommends that the employer does not alter their address of record to that of the payroll provider as it might substantially restrict the employer's ability to be notified of involving their business. - Electronic Funds Transfer (EFT) need to be utilized to deposit all federal tax deposits. Generally, an EFT is made utilizing Electronic Federal Tax Payment System (EFTPS). Employers ought to ensure their payroll service providers are using EFTPS, so the employers can verify that payments are being made on their behalf. Employers need to register on the EFTPS system to get their own PIN and utilize this PIN to periodically validate payments. A red flag ought to go up the very first time a service provider 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 extra tax payments that their third-party service provider is not making on their behalf such as approximated tax payments. There have been prosecutions of individuals and companies, who acting under the appearance of a payroll service supplier, have actually taken funds intended for payment of employment taxes.

EFTPS is a secure, accurate, and simple to use service that supplies an instant verification for each deal. This service is offered totally free of charge from the U.S. Department of Treasury and enables employers to make and verify federal tax payments digitally 24 hr a day, 7 days a week through the web or by phone. To find out more, companies can register online at EFTPS.gov or call EFTPS Customer care at 800-555-4477 for a registration kind or to talk to a customer care representative.

Remember, employers are eventually 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 costs or notification gotten is an outcome of an issue with their payroll service company should contact the IRS as soon as possible by calling the number on the bill, composing to the IRS office that sent out the costs, calling 800-829-4933 or going to a local IRS office. To learn more about IRS notifications, costs and payment choices, refer to Publication 594, The IRS Collection Process PDF.