Outsourcing Payroll - The Employer’s Liability

May 2 2013

Did you know, that if you outsource your payroll you are still liable for any mistakes?

A recent article, Tax Surprises Can Follow When Payroll Firm Explode, by the Wall Street Journal addresses some the issues that can arise from outsourcing your payroll.

The main concern addressed is payroll outsourcing providers stealing employment tax payments from their clients. This results in the employer owing the IRS the taxes plus any interest and penalties.

The article states that there is no special license required to become a payroll provider. Additionally, there is no regulation that forces these firms to confirm the tax payments to their clients after they have been sent. Even though the employer sends off all data to their outside provider, it is the employer (or even an individual) that is still considered responsible for the payment in taxes to the IRS.


In fact, if employee taxes are owed, the IRS will go directly to the employer to collect the money plus an interest or fees owed. The payroll provider does not even have to be notified.


With an in house HRIS software, like Optimum Solutions, you are in control. You know who pays your federal and state taxes, the exact amount that is deposited and on which day that deposit was made. The payroll process is in your hands, there is no lack of control and no complications.