payroll service provider

16:09 Jun 3, 2014 

Payroll Service Provider

1. A payroll service provider (PSP) is a third party that can help an employer administer payroll and employment taxes on behalf of an employer.
2. An employer may enter into an agreement with a PSP under which the employer authorizes the PSP to perform one of more of the following acts on the employer's behalf:
- Prepare the paychecks for the employees of the employer.
- Prepare Forms 940 and 941 for the employer using the employer's EIN.
- File Forms 940 and 941 for the employer, which are signed by the employer.
- Make federal tax deposits (FTDs) and federal tax payments and submit this information for the taxes reported on the Forms 940 and 941.
- Prepare Form W-3 and Forms W-2 for the employees of the employer using the employer's EIN.
3. A PSP is not liable for an employer's employment taxes as either an employer or an agent.
4. An employer's use of a PSP does not relieve the employer of its employment tax obligations or liability for employment taxes.
http://www.irs.gov/irm/part5/irm_05-001-024r.html