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Outsourcing Payroll Duties
orvalclifton13 edited this page 1 month ago
Outsourcing payroll duties can be a sound company practice, however ... Know your tax obligations as a company
Many companies contract out some or all their payroll and associated tax duties to third-party payroll service providers. Third-party payroll service companies can improve organization operations and help meet filing deadlines and deposit requirements. A few of the services they supply are:
- Administering and work taxes on behalf of the employer where the employer provides the funds initially to the third-party.
- Reporting, collecting and transferring employment taxes with state and federal authorities.
Employers who outsource some or all their payroll obligations must think about the following:
- The employer is ultimately responsible for the deposit and payment of federal tax liabilities. Despite the fact that the employer may forward the tax amounts to the third-party to make the tax deposits, the employer is the responsible celebration. 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 company is accountable for all taxes, penalties and interest due. The company might likewise be held personally accountable for specific unsettled federal taxes. - If there are any problems with an account, then the IRS will send correspondence to the employer at the address of record. The IRS strongly recommends that the company does not alter their address of record to that of the payroll provider as it may significantly restrict the company's ability to be informed of tax matters involving their organization.
- Electronic Funds Transfer (EFT) should be utilized to transfer all federal tax deposits. Generally, an EFT is made using Electronic Federal Tax Payment System (EFTPS). Employers must ensure their payroll providers are using EFTPS, so the employers can validate that payments are being made on their behalf. Employers need to sign up on the EFTPS system to get their own PIN and utilize this PIN to regularly confirm payments. A warning must increase the very first time a company misses a payment or makes a late payment. When an employer registers on EFTPS they will have on-line access to their payment history for 16 months. In addition, EFTPS permits employers 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 provider, have actually stolen funds intended for payment of employment taxes.
EFTPS is a safe, accurate, and simple to utilize service that provides an immediate verification for each deal. 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 internet or by phone. To learn more, companies can enroll online at EFTPS.gov or call EFTPS Customer support at 800-555-4477 for a registration kind or to consult with a client service representative.
Remember, companies are eventually 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 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 costs, writing to the IRS office that sent the bill, calling 800-829-4933 or checking out a local IRS office. For additional information about IRS notices, costs and payment alternatives, refer to Publication 594, The IRS Collection Process PDF.