When companies outsource their payroll to third parties, it usually makes doing business a little smoother. However, the IRS wants these businesses to remember that they are responsible for paying federal taxes.
There have been charges brought against individuals and companies who have appropriated funds that were meant for employment taxes, so it’s critical that employers who outsource their payroll are aware of these tips provided by the IRS:
1. Employer Responsibility: It is the employer’s responsibility to deposit and pay federal taxes. Even if they forward the payments to their third-party payroll service to make the deposits, the employer is always responsible for them.
If the payroll service doesn’t make the payments, the IRS will charge the employer with interest and penalties. The IRS can hold the employer accountable for other unpaid federal taxes.
2. Correspondence: If there happen to be account issues, be assured that the IRS will send a notice to the payroll service’s address. It is recommended that employers do not change the address on record with the IRS without notifying them, this way the employer, and the payroll service, doesn’t miss important information.
3. EFTPS: It’s a good idea to use a payroll service that uses the Electronic Federal Tax Payment System. To get their own PIN to verify payments, the payroll service can register on the EFTPS system.
There is more information about employer responsibility regarding federal tax payments with outsourced payroll service providers on irs.gov. Also, you may want to check with a qualified tax and/or payroll professional if you have questions.
