Employers using a third-party payroll service provider are responsible for their tax obligation if federal tax deposits are not made or are not timely.
In recent years there have been many cases of third-party payroll service providers routinely impounding the employee tax withholdings and employer tax obligations from employers’ bank accounts but not following through with submission of those funds to the taxing authorities and going out of business or becoming insolvent prior to the employer discovering the delinquency thus created. This leaves the employer with the obligation to fund these obligations a second time, plus remit penalties and interest.
Beginning this year, when taxpayers are enrolled in EFTPS the IRS will automatically send an Inquiry PIN to their IRS address of record. Taxpayers who have had activity on their EFTPS account over the prior 12 months will also receive Inquiry PINs. Thus, clients of payroll service providers will be able to use these Inquiry PINs from EFTPS to monitor transactions made by third-party providers to ensure funds paid to or impounded by third-party providers for remittance to the IRS are in fact deposited on their behalf intact and timely to the IRS.
For more information:
- IRS EFTPS Customer Service — 800 991-2245
- IRS Business Customer Service — 800 829-4933
DISCLAIMER: This information is extracted with permission from IRS releases. We are not responsible for the application of this general information to the specific circumstances of a reader unless we have been engaged as the reader’s accounting firm.
Payroll preparation services offered by our firm:
Roy & Associates, PC and its predecessor firms have been offering payroll preparation services at competitive rates to its clients since 1977. We do NOT impound the payroll taxes at the time or payroll processing like most third-party payroll service providers, and have never done so. Instead, we allow those funds to remain in our clients’ bank accounts until the required deposit due date at which time the funds are transferred via federal and state EFTPS deposit systems directly to the taxing authorities. Thus, our payroll preparation clients are not at risk for loss of their impounded funds, and these clients maintain the use of those funds until the required due date for deposit. If you would like more information about the payroll preparation services offered by our firm and the fees for such services, please contact one of our Directors of Audit and Tax Services. See CONTACTS.