Have you read in the newspapers about unscrupulous payroll services embezzzling their clients tax deposit money?  Now, I’m not talking about the “big boys” like PayChex and ADP, but there are so many small companies offering this service, you can reduce your expenses for payroll processing, but don’t increase your liability!

The IRS has come up with these important tips to keep your payroll funds safe. Since your company is ultimately responsible for payment of all taxes, if the payroll service fails to file or pay, follow these tips to take responsibility and protect yourself.

  • Enroll in the IRS’s Electronic Federal Tax Payment System (EFTPS) which will give you online access to payment history, to verify amounts and deposits made under your EIN. It will also give you the ability to remit deposits, reducing penalties on late or incomplete amounts.
  • Knowing tax return and payment dates is crucial. You will then be able to ensure your service has made the payments in a timely manner.
  • Your firm’s address should be used on all tax forms and records. This ensures your firm will receive all notices, bill and correspondences, alerting you of anything needing immediate attention.
  • When receiving an IRS bill or notice, your firm, not the service, should handle it. Correspond with your service with this information.

A reporting agent (RA) is required to use EFTPS, to file electronically and provide statements.  A Payroll Service Provider (PSP) is not required to do any of this.  RA and PSP duties and obligations are found at www.irs.gov search then click on Third Party Arrangement Chart.