Outsourcing payroll duties to third-party service providers can streamline business operations, but the IRS reminds employers that they are ultimately responsible for paying federal tax liabilities.
Recent prosecutions of individuals and companies who – acting under the guise of a payroll service provider – have stolen funds intended for payment of employment taxes makes it important that employers who outsource payroll are aware of the following tips from the IRS:
1. Employer Responsibility: Even though you forward the tax payments to the third-party to make the tax deposits, you – the employer – are the responsible party. If the third-party fails to make the federal tax payments, the IRS may assess penalties and interest. The employer is liable for all taxes, penalties and interest due. The IRS can also hold you personally liable for certain unpaid federal taxes.
2. Correspondence: The IRS strongly suggest you do not change the address of record to that of the payroll service provider. That could limit your ability to stay informed of tax matters involving your business.
3. EFTPS: Choose a payroll service provider that uses the Electronic Federal Tax Payment System.
Contact me if you have any questions!