Protecting Employers from Noncompliant Payroll Service Providers:

Approximately 40% of small companies outsource part or all of their payroll function, including federal employment tax withholding, tax return preparation and filing, and tax payment responsibilities. While employers may outsource the function, they remain responsible for any unpaid tax, interest, and penalties. The Treasury Inspector General for Tax Administration issued a report indicating safeguards the IRS should implement to protect employers and the government from noncompliant third-party PSPs. Some of the suggestions include linking employers to PSPs through the Electronic Federal Tax Payment System and having employers inform the IRS when they authorize to a third party to perform these tasks. A copy of the report is at http://www.treasury.gov/tigta/auditreports/2015reports/201540023fr.pdf .