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Outsourcing Payroll Duties
adelamountford edited this page 3 weeks ago
Outsourcing payroll responsibilities can be a sound business practice, but ... Know your tax obligations as an employer
Many employers outsource some or all their payroll and related tax duties to third-party payroll company. Third-party payroll company can enhance service operations and help fulfill filing due dates and deposit requirements. Some of the services they offer are:
- Administering payroll and on behalf of the company where the company provides the funds at first to the third-party.
- Reporting, gathering and transferring employment taxes with state and federal authorities.
Employers who outsource some or all their payroll obligations need to consider the following:
- The employer is eventually responsible for the deposit and payment of federal tax liabilities. Although the employer might forward the tax totals up to the third-party to make the tax deposits, the employer is the accountable celebration. If the third-party stops working to make the federal tax payments, then the IRS may assess charges and interest on the company's account. The company is accountable for all taxes, charges and interest due. The company might likewise be held personally accountable for particular overdue 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 highly recommends that the employer does not change their address of record to that of the payroll service supplier as it may substantially limit the employer's capability to be notified of tax matters including their service.
- Electronic Funds Transfer (EFT) need to be utilized to transfer all federal tax deposits. Generally, an EFT is used Electronic Federal Tax Payment System (EFTPS). Employers ought to guarantee their payroll providers are utilizing EFTPS, so the companies can validate that payments are being made on their behalf. Employers should sign up on the EFTPS system to get their own PIN and use this PIN to occasionally verify payments. A warning must go up the very first time a provider misses out on a payment or makes a late payment. When an employer 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 additional tax payments that their third-party service provider is not making on their behalf such as estimated tax payments. There have been prosecutions of individuals and companies, who acting under the look of a payroll service supplier, have stolen funds intended for payment of work taxes.
EFTPS is a protected, precise, and easy to utilize service that provides an instant verification for each transaction. This service is used totally free of charge from the U.S. Department of Treasury and allows employers to make and confirm federal tax payments electronically 24 hr a day, 7 days a week through the internet or by phone. For more details, employers can enroll online at EFTPS.gov or call EFTPS Customer support at 800-555-4477 for a registration kind or to consult with a customer care agent.
Remember, employers are ultimately responsible for the payment of earnings tax kept and of both the employer and staff member portions of social security and Medicare taxes.
Employers who believe that a bill or notice gotten is a result of an issue with their payroll service company need to call the IRS as soon as possible by calling the number on the bill, writing to the IRS office that sent out the bill, calling 800-829-4933 or checking out a regional IRS office. For additional information about IRS notifications, costs and payment choices, describe Publication 594, The IRS Collection Process PDF.