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

Many employers outsource some or all their payroll and associated tax tasks to third-party payroll service companies. Third-party payroll provider can improve company operations and help fulfill filing deadlines and deposit requirements. A few of the services they provide are:

- Administering payroll and work taxes on behalf of the company where the employer supplies the funds at first to the third-party.

• Reporting, collecting and depositing employment taxes with state and federal authorities.
  
  Employers who contract out some or all their should consider the following:
  
  - The company is ultimately responsible for the deposit and payment of federal tax liabilities. Although the company may forward the tax amounts to the third-party to make the tax deposits, the company is the accountable party. If the third-party stops working to make the federal tax payments, then the IRS might evaluate penalties and interest on the company's account. The company is accountable for all taxes, penalties and interest due. The employer may also be held personally accountable for particular unsettled 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 strongly suggests that the employer does not change their address of record to that of the payroll provider as it may significantly restrict the employer's capability to be informed of tax matters involving their service.
• Electronic Funds Transfer (EFT) must be utilized to deposit all federal tax deposits. Generally, an EFT is made utilizing Electronic Federal Tax Payment System (EFTPS). Employers must guarantee their payroll suppliers are using EFTPS, so the employers can validate that payments are being made on their behalf. Employers should register on the EFTPS system to get their own PIN and utilize this PIN to periodically confirm payments. A red flag needs to go up the first time a service supplier misses 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 permits employers to make any extra tax payments that their third-party supplier is not making on their behalf such as approximated tax payments. There have been prosecutions of people and companies, who acting under the look of a payroll provider, have actually stolen funds meant for payment of work taxes.
  
  EFTPS is a protected, accurate, and simple to use service that offers an immediate verification for each deal. This service is offered complimentary of charge from the U.S. Department of Treasury and allows companies to make and confirm federal tax payments digitally 24 hr a day, 7 days a week through the internet or by phone. For more information, employers can register online at EFTPS.gov or call EFTPS Client service at 800-555-4477 for a registration type or to talk with a customer support representative.
  
  Remember, companies are ultimately responsible for the payment of income 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 received is an outcome of a problem with their payroll company ought to get in touch with the IRS as soon as possible by calling the number on the bill, composing to the IRS workplace that sent the bill, calling 800-829-4933 or going to a local IRS workplace. For additional information about IRS notices, expenses and payment options, refer to Publication 594, The IRS Collection Process PDF.