Many of our clients contract with a payroll service provider to take care of payroll tax filing responsibilities. It is important to remember, though, that the ultimate responsibility for withholding income tax and both the employer and employee portions of Social Security and Medicare taxes lies with the business owner.
While most payroll service providers are reputable and reliable, it’s not a bad idea to adopt the well-known Russian proverb: Trust, but verify.
The following are some steps we recommend employers take when working with a payroll services provider:
- Hire a bonded payroll service provider and never sign blank tax returns;
- Do not have any IRS notices sent directly to your payroll service bureau;
- Log into your EFTPS (the IRS’s Electronic Federal Tax Payment System) to confirm your tax deposits were made and that your tax returns were filed; and
- Do not let the payroll service change the employer’s address of record with the IRS. Fortunately, when the IRS receives an address change for an employer, it sends duplicate notices to both the old and new address.
If you suspect your payroll service provider of improper or fraudulent activities involving the deposit of your federal taxes or the filing of your returns, you can file a complaint using Form 14157, Complaint: Tax Return Preparer.