1 Outsourcing Payroll Duties

erwinoneill488 edited this page 2025-07-07 17:07:10 +00:00

Outsourcing payroll tasks can be a sound company practice, but ... Know your tax duties as an employer

Many companies outsource some or all their payroll and associated tax tasks to third-party payroll company. Third-party payroll provider can improve company operations and assist satisfy filing due dates and deposit requirements. A few of the services they supply are:
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- Administering and work taxes on behalf of the company where the employer provides the funds initially to the third-party.

• Reporting, gathering and transferring work taxes with state and federal authorities.
  
  Employers who outsource some or all their payroll responsibilities need to consider the following:
  
  - The company is ultimately responsible for the deposit and payment of federal tax liabilities. Despite the fact that the company might forward the tax totals up to the third-party to make the tax deposits, the employer is the accountable party. If the third-party stops working to make the federal tax payments, then the IRS might examine charges and interest on the company's account. The company is liable for all taxes, charges and interest due. The company might also be held personally accountable for particular unpaid federal taxes.
• If there are any issues with an account, then the IRS will send out correspondence to the employer at the address of record. The IRS highly suggests that the company does not change their address of record to that of the payroll service company as it may significantly limit the employer's ability to be notified of tax matters involving their service.
• Electronic Funds Transfer (EFT) need to be utilized to transfer all federal tax deposits. Generally, an EFT is made using Electronic Federal Tax Payment System (EFTPS). Employers need to ensure their payroll companies are using EFTPS, so the employers can confirm 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 occasionally validate payments. A red flag must increase 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 allows employers to make any additional tax payments that their third-party supplier is not making on their behalf such as approximated tax payments. There have been prosecutions of individuals and business, who acting under the look of a payroll service provider, have taken funds meant for payment of employment taxes.
  
  EFTPS is a protected, accurate, and easy to utilize service that offers an instant verification for each transaction. This service is used totally free 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 web or by phone. For additional information, companies can enroll online at EFTPS.gov or call EFTPS Customer support at 800-555-4477 for an enrollment kind or to speak to a customer care agent.
  
  Remember, companies are ultimately responsible for the payment of earnings tax kept and of both the employer and employee portions of social security and Medicare taxes.
  
  Employers who believe that a costs or notification received is an outcome of a problem with their payroll company ought to contact the IRS as soon as possible by calling the number on the expense, writing to the IRS office that sent the expense, calling 800-829-4933 or checking out a local IRS workplace. To find out more about IRS notices, expenses and payment options, describe Publication 594, The IRS Collection Process PDF.
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