1 Outsourcing Payroll Duties

carissafairwea edited this page 2025-03-14 03:25:36 +08:00

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

Many employers outsource some or all their payroll and related tax responsibilities to third-party payroll provider. Third-party payroll service providers can improve company operations and assist meet filing deadlines and deposit requirements. Some of the services they offer are:

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

• Reporting, collecting and depositing employment taxes with state and federal authorities.
  
  Employers who contract out some or all their payroll obligations need to consider the following:
  
  - The employer is eventually responsible for the and payment of federal tax liabilities. Even though the company may forward the tax amounts to the third-party to make the tax deposits, the company is the responsible party. 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 company is responsible for all taxes, penalties and interest due. The employer may likewise be held personally accountable for certain unsettled federal taxes.
• If there are any issues with an account, then the IRS will send out correspondence to the company at the address of record. The IRS highly suggests that the company does not change their address of record to that of the payroll provider as it may considerably limit the employer's capability to be notified of tax matters including their service.
• Electronic Funds Transfer (EFT) must be used to transfer all federal tax deposits. Generally, an EFT is used Electronic Federal Tax Payment System (EFTPS). Employers need to ensure their payroll suppliers are utilizing EFTPS, so the companies can confirm that payments are being made on their behalf. Employers ought to register on the EFTPS system to get their own PIN and use this PIN to occasionally confirm payments. A warning needs to increase the first time a service company misses a payment or makes a late payment. When a company signs up on EFTPS they will have on-line access to their payment history for 16 months. In addition, EFTPS permits companies to make any extra tax payments that their third-party supplier is not making on their behalf such as estimated tax payments. There have been prosecutions of people and business, who acting under the look of a payroll provider, have taken funds intended for payment of employment taxes.
  
  EFTPS is a secure, accurate, and easy to utilize service that supplies an instant confirmation for each transaction. This service is offered complimentary of charge from the U.S. Department of Treasury and allows employers to make and verify federal tax payments digitally 24 hours a day, 7 days a week through the web or by phone. To find out more, companies can enlist online at EFTPS.gov or call EFTPS Customer Service at 800-555-4477 for a registration form or to talk to a customer support agent.
  
  Remember, companies are ultimately responsible for the payment of earnings tax withheld and of both the employer and staff member portions of social security and Medicare taxes.
  
  Employers who believe that a bill or notification received is an outcome of a problem with their payroll company should contact the IRS as quickly as possible by calling the number on the bill, writing to the IRS office that sent out the bill, calling 800-829-4933 or visiting a local IRS workplace. For more details about IRS notifications, bills and payment options, refer to Publication 594, The IRS Collection Process PDF.