Even if a payroll service is used, the employer remains responsible for meeting its payroll tax responsibilities and could be financially liable if those responsibilities are not met. For employers that have elected to use a payroll service, the IRS offers these tips:
- Deposit payroll taxes regularly with the U.S. Treasury using the Electronic Federal Tax Payment System (EFTPS). You must register with EFTPS to use it. Your payroll service may complete this registration for you and use EFTPS on your behalf, but how do you know the service is making your deposits?
- Enroll in EFTPS yourself to monitor your deposits. You can even make your own deposits. If a payroll service enrolls your business in EFTPS, you will receive an EFTPS inquiry PIN. This PIN doesn't let you use EFTPS, but it does allow you to view your account. You should know when your payroll tax deposits are due and use your EFTPS inquiry PIN to verify deposits made.
- Don't let your payroll service change your address of record with the IRS. You want any correspondence or other contact from IRS coming directly to you. That way, if there's a problem, you'll know about it. When the IRS receives an address change for an employer, it sends duplicate notices to both the old and new addresses so you'll know if the IRS changed your address. The IRS urges employers not to change their address of record to that of their payroll service provider.
- If you suspect your payroll service isn't doing everything it should or suspect fraudulent activity by your service provider, contact the IRS. You can file a complaint using IRS Form 14157, Complaint: Tax Return Preparer. Check the box on Line #1 marked "Payroll Service Provider." You can mail or fax the form to the IRS; the mailing address and fax number are on the form. Any complaints about payroll service providers will receive expedited review and investigation.
- If you get a letter from the IRS about a problem with your payroll taxes, contact the IRS and your payroll service right away. If you're not sure about your IRS letter, check out the "Understanding Your IRS Notice or Letter" page on http://www.IRS.gov.
Source: SSA/IRS Reporter, Spring 2017.