Many employers hire third-party payroll service providers to perform their payroll processing functions and tax-related duties, including making employment tax deposits.
The employer, generally, remains liable for any unpaid employment taxes, including any penalties and interest resulting from any underpayment, even if they use a third-party payroll service provider.
Note, this may not apply to employers using Certified Professional Employer Organizations (CPEO).
To ensure an employer’s third-party payroll service provider makes accurate and timely federal tax deposits, employers should monitor deposits made on their behalf for accuracy and timeliness.
Using an EFTPS Inquiry PIN to monitor tax deposits
Third-party payroll service providers who make tax deposits and payments on behalf of their client, normally, enroll them in the Electronic Federal Tax Payment System via the payroll provider’s EFTPS account by using the client’s EIN. This allows the third-party payroll service provider to make deposits using the client employer’s EIN.
When third-party payroll service providers enroll client employers in EFTPS, an EFTPS Inquiry PIN may be sent to the employer. Client employers who have deposits made on their EFTPS account during the prior 12 months may also receive Inquiry PINs. An Inquiry PIN allows the employer to verify their third-party provider is making timely and accurate federal tax deposits.
The benefits of creating a separate EFTPS account
While many employers use an Inquiry PIN to monitor deposits made on their behalf, others may want to separately enroll and create their own EFTPS account. Creating an EFTPS account allows the employer to not only monitor tax deposits but also:
- Set up reminders,
• Make tax deposits and payments on their own,
• Make up any missed tax deposits and payments and
• Keep making tax deposits and payments if they change payroll service providers.
Setting up EFTPS notifications
Whether an employer chooses to use an Inquiry PIN, or to create their own EFTPS account, the employer can also sign up and enroll to receive email notifications about their account’s activities. Access to this feature requires a PIN and password.
Once an employer opts in for email notifications, the employer will receive notifications about their deposits and payments submitted, including those made by their payroll service provider.
Email notification messages show:
- Payments scheduled,
• Payment cancellation,
• Returned payments and
• Reminders of scheduled payments.
Email notifications only allow one email address per taxpayer. If the email address changes, a message regarding the change is sent to both the old and new addresses.
Employers can cancel email notifications at any time.
Find more information by watching Monitoring your outsourced payroll duties on EFTPS and by visiting www.EFTPS.gov.