October 23, 2019 IRS reminds employers how they can confirm third-party payroll providers are making correct and timely employment tax deposits In IR-2019-171 the IRS informed small business owners that the Electronic Federal Tax Payment System (EFTPS) can help them meet their tax obligations as employers, whether they engage a payroll service provider or prepare and submit payroll taxes themselves. The IRS also reminds employers that employment tax deposits must be made electronically and recommends that those using a payroll service provider to handle employment tax obligations should confirm that the entity charged with remitting employment tax to the IRS on the employer's behalf uses the EFTPS. The IRS emphasizes that in addition to being secure and accurate, EFTPS provides immediate confirmation for each transaction and is free to use. The IRS website has EFTPS information for employers that use payroll service providers. Employers may enroll online at EFTPS.gov or call EFTPS Customer Service (800-555-4477) to request an enrollment form. The IRS advises employers not use a payroll service provider's address as the employer's address of record "as it may limit the employer's ability to be informed of tax matters." Monitoring third-party provider deposit activity The IRS notes that when a payroll service provider (or other third party) enrolls a client in the EFTPS under the services provider's account, an EFTPS Inquiry PIN may be generated for the employer, allowing the employer to monitor and ensure the service provider is making all required tax payments. The IRS recommends that employers that do not have Inquiry PINs and do not have their own EFTPS enrollment register in the EFTPS to obtain their own PIN and use it to periodically verify payments. "A red flag should go up the first time a service provider misses or makes a late payment," the IRS states. Being enrolled in EFTPS allows employers to make up missed tax payments, continue making tax payments if changing payroll service providers, and opt-in to receive email notifications about activity on their accounts. Alerting the IRS about issues with a third-party provider If an employer receives a bill or notice due to a problem with a service provider, the employer should immediately (1) call or write the IRS office that sent the bill, (2) call +1 800 829 4933, or (3) make an appointment to visit the local IRS office. If an employer suspects its payroll service provider of improper or fraudulent activities involving filing tax returns or depositing federal taxes as required, the employer should file a complaint with the Return Preparer Office using Form 14157, Return Preparer Complaint (PDF). More information is available regarding IRS notices, bills and payment options refer to Publication 594, The IRS Collection Process (PDF). Ernst & Young LLP insights Oversight of third-party payroll provider activity is important, pursuant to all federal, state and local payroll tax obligations, and several monitoring processes should be in place. Read more about governance of third-party payroll provider service arrangements in our special report, Managing employment tax risk in payroll outsourcing arrangements. ———————————————
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