Maybe you’ve decided to outsource payroll duties to a third-party provider.
Be aware that outsourcing doesn’t relieve you of your tax obligations. The IRS has posted reminders to business taxpayers about the key rules at www.irs. gov/Businesses/Small-Businesses-&-Self Employed/Outsourcing-Payroll-Duties.
1. Your company is ultimately responsible for federal tax liabilities even if the third party makes the payroll tax deposits. If the third party fails to do so in a timely manner, the IRS may assess penalties and interest on the employer’s account. In some cases, you could be held personally liable for federal taxes withheld from employee paychecks under the “trust fund recovery penalty”, sometimes called the “100% penalty.”
2. If the IRS has concerns about an account, it will send correspondence to the employer’s address of record. Don’t change the record to reflect the third party’s address.
3. The Electronic Federal Tax Payment System must be used if payroll taxes exceed $200,000 for the year. Register on EFTPS to obtain a Personal Identification Number and use the PIN to verify payments. You can access your history online for 16 months. EFTPS also allows you to make additional payments the third party may have missed, such as estimated tax payments.
Tip: Enroll in EFTPS online at www.eftps. gov or call 800-555-4477.