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

Many employers contract out some or all their payroll and related tax tasks to third-party payroll provider. Third-party payroll service providers can streamline service operations and help fulfill filing due dates and deposit requirements. A few of the services they provide are:

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

• Reporting, collecting and depositing employment taxes with state and .
  
  Employers who contract out some or all their payroll obligations should consider the following:
  
  - The employer 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 responsible party. If the third-party fails to make the federal tax payments, then the IRS may assess charges and interest on the employer's account. The employer is accountable for all taxes, charges and interest due. The company might likewise be held personally responsible for certain overdue federal taxes.
• If there are any issues 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 alter their address of record to that of the payroll company as it may substantially limit the employer's ability to be notified of tax matters involving their business.
• Electronic Funds Transfer (EFT) must be utilized to deposit all federal tax deposits. Generally, an EFT is made using Electronic Federal Tax Payment System (EFTPS). Employers should ensure their payroll service providers are utilizing EFTPS, so the companies can verify 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 occasionally confirm payments. A red flag needs to go up 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 allows companies to make any extra tax payments that their third-party provider is not making on their behalf such as approximated tax payments. There have been prosecutions of people and companies, who acting under the appearance of a payroll service supplier, have actually stolen funds meant for payment of employment taxes.
  
  EFTPS is a secure, precise, and easy to utilize service that offers an instant verification for each transaction. This service is offered free of charge from the U.S. Department of Treasury and permits employers to make and validate federal tax payments electronically 24 hr a day, 7 days a week through the web or by phone. For more info, companies can enroll online at EFTPS.gov or call EFTPS Customer support at 800-555-4477 for a registration type or to talk to a consumer service representative.
  
  Remember, employers are ultimately accountable 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 a costs or notice gotten is an outcome of an issue with their payroll company ought to call the IRS as quickly as possible by calling the number on the expense, writing to the IRS office that sent the expense, calling 800-829-4933 or visiting a regional IRS workplace. To find out more about IRS notices, bills and payment options, describe Publication 594, The IRS Collection Process PDF.