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PAYROLL OUTSOURCING DOESN'T OUTSOURCE RESPONSIBILITY

September 09, 2008

One of the worst nightmares for a small business is to find out that your payroll service has absconded with your employment tax payments. Suddenly you have a large debt to a very powerful and ornery creditor, as the IRS still wants the money.

The IRS has put up a useful discussion, Outsourcing Payroll Duties. It has much useful stuff, like this:

If there are any issues with an account, the IRS will send correspondence to the employer at the address of record. The IRS strongly suggests that the employer does not change their address of record to that of the payroll service provider...

This is a must. If your payroll service guy is using your payroll tax money to fund his girlfriend's condo, you don't want him receiving the IRS delinquency notices.

Employers should ensure that their service providers are using EFTPS (Electronic Federal Tax Payment System) so the employer can confirm payments made on their behalf. Everyone should use EFTPS and Treasury regulations require electronic payment for payroll taxes over $200,000 in a calendar year. EFTPS maintains a business’s payment history for 16 months and can be viewed on-line after enrollment.

Get EFTPS, and make it a point to go online after every payroll date to make sure your taxes are being remitted. It's a minor inconvenience, but it could save major headaches.

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