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Outsourcing Payroll Duties
alishamcrae360 edited this page 3 weeks ago
Outsourcing payroll responsibilities can be a sound business practice, however ... Know your tax duties as an employer
Many employers outsource some or all their payroll and associated tax responsibilities to third-party payroll provider. Third-party payroll company can enhance organization operations and assist fulfill filing due dates and deposit requirements. A few of the services they offer are:
- Administering payroll and work taxes on behalf of the employer where the employer provides the funds initially to the third-party.
- Reporting, gathering and depositing employment taxes with state and federal authorities.
Employers who outsource some or all their payroll responsibilities should consider the following:
- The company is eventually responsible for the deposit and payment of federal tax liabilities. Although the employer might forward the tax amounts to the third-party to make the tax deposits, the company is the accountable party. If the third-party fails to make the federal tax payments, then the IRS may examine penalties 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 specific unpaid federal taxes. - If there are any concerns with an account, then the IRS will send correspondence to the company at the address of record. The IRS strongly recommends that the company does not change their address of record to that of the payroll company as it might substantially restrict the employer's ability to be informed of tax matters including their service.
- Electronic Funds Transfer (EFT) should be used to deposit all federal tax deposits. Generally, an EFT is made utilizing Electronic Federal Tax Payment System (EFTPS). Employers ought to guarantee their payroll companies are utilizing EFTPS, so the can verify that payments are being made on their behalf. Employers should sign up on the EFTPS system to get their own PIN and utilize this PIN to occasionally verify payments. A warning needs to go up the first time a 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 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 actually been prosecutions of people and business, who acting under the appearance of a payroll service company, have actually taken funds intended for payment of employment taxes.
EFTPS is a secure, precise, and easy to use service that offers an instant confirmation for each transaction. This service is used free of charge from the U.S. Department of Treasury and allows companies to make and validate federal tax payments electronically 24 hours a day, 7 days a week through the web or by phone. To learn more, employers can register online at EFTPS.gov or call EFTPS Customer support at 800-555-4477 for a registration type or to talk to a customer care agent.
Remember, employers are eventually accountable for the payment of earnings tax kept and of both the company and staff member parts of social security and Medicare taxes.
Employers who think that an expense or notice gotten is an outcome of an issue with their payroll company must contact the IRS as soon as possible by calling the number on the bill, writing to the IRS office that sent out the expense, calling 800-829-4933 or visiting a regional IRS workplace. For additional information about IRS notifications, costs and payment options, describe Publication 594, The IRS Collection Process PDF.