Business owners and financial executives now have one more thing to keep track of – making sure payroll taxes are actually getting paid to tax authorities.
With so many businesses relying on outside parties to process paychecks and pay employment taxes, millions of dollars pass through the hands of payroll companies every day. But are those millions of dollars making it into workers’ paychecks and, just as important, being sent to federal and state tax authorities?
When a New York payroll company called MyPayrollHR abruptly ceased operations, employees at thousands of companies were left without paychecks. And, the payroll company failed to remit payroll taxes to government agencies, leaving its clients to deal with a huge legal mess.
We won’t rehash all the details of what happened in New York – you can read about it here – but we want to stress that what happened in New York could happen anywhere, and it has. In fact, a number of our clients have fallen victim to payroll companies who failed to pay the appropriate tax authorities. These clients had to pay six-figure liabilities, and even though the IRS in one case abated the penalties, our client still accrued and had to pay interest on top of paying the taxes again.
The lesson? Just because a payroll company withhold taxes doesn’t mean the government got paid.
To make sure your payroll company is remitting withholdings to tax authorities, business owners and financial executives should log into a government agency’s website or system to confirm that payments are getting posted as paid. It’s also a good idea to verify that any other liabilities that are impounded by the payroll company are paid to the proper companies.
It’s also worth reminding your employees to look closely at their paychecks to make sure direct deposits are indeed making it into the right bank accounts.
Contact us online or call 800.899.4623 for help.