Payroll outsourcing? You are still responsible!

Do you outsource your business’s payroll?

Many business owners choose to outsource payroll related tax duties to third party payroll service providers.  The IRS provides the following advice on Outsourcing Payroll Duties:

• If the employer uses a third party payroll service provider, the employer remains ultimately responsible for his business’s deposit and federal tax payment responsibilities.  Therefore, the employer is liable for all taxes, penalties and interest due and may be held personally liable for his company’s unpaid taxes even if the third-party is at fault for not making timely payments. 
• The IRS recommends that the employer’s address be used (as opposed to the payroll service provider’s address) as the business’s address of record to insure that the employer is timely made aware of any issues with the account. 
• The IRS recommends that employers verify that the payroll service provider is using the Electronic Federal Tax Payment System (EFTPS) so that the employer can immediately confirm online that his business’s payments are timely made.   

Therefore, every employer must remember that they are the party ultimately responsible for their business’s tax payment (and withholding) obligations.