On July 18, 2013 the IRS released a bulletin warning employers who outsource their payroll about the risks involved. The article highlights that although employers may outsource their payroll for convenience, they are the ones ultimately responsible for ensuring all taxes and related activities are paid correctly.
The IRS warns that several individuals and companies, who claim to provide a payroll processing service, have been convicted of stealing funds from their clients that were intended to pay taxes. In fact, there have already been 31 tax evasion cases in 2013 involving payroll processors. IRS.gov has the full list available.
The bulletin states:
“Like employers who handle their own payroll duties, employers who outsource this function are still legally responsible for any and all payroll taxes due. This includes any federal income taxes withheld as well as both the employer and employee’s share of social security and Medicare taxes. This is true even if the employer forwards tax amounts to a PSP or TA to make the required deposits or payments.”
Even after a company sends all the required information and documents to the payroll service provider, it is still the sole entity held responsible to ensure payments and taxes are made on time and correctly.
Using an in house payroll solution, such as Optimum Solutions, can alleviate all concerns about tax fraud occurring by a 3rd party. An in house solution enables you to take control of your payroll and taxes to ensure they are paid on time and in the full amount.