The IRS is reminding employers to carefully choose their payroll service providers (PSPs) following ongoing concerns that some disreputable organizations can fail to deposit employment taxes, leaving businesses vulnerable to unpaid bills.
Each year, a few of these third-party providers fail to remit the payroll taxes entrusted to them and abruptly close down, the IRS said.
For third-party arrangements, the IRS suggests employers use a certified professional organization (CPEO) that is solely liable for paying the customer's employment taxes, filing returns and making deposits and payments for the taxes reported with regard to wages and other compensation it pays to its employees.
Other options include reporting agents who inform the IRS of its relationship with a client. This Third Party Arrangement Chart from the IRS provides an overview of how the roles and obligations of PSPs, RAs and CPEOs vary.