Response to the following problem:
Outsourcing the payroll function can provide many benefits, but there are also risks associated with outsourcing. The IRS provides information on outsourcing payroll duties for employers who outsource the payroll function (search for "payroll outsourcing"). The IRS also provides information on employment tax fraud investigations (search for "employment tax fraud").
Required:
a. If the third party makes the payroll tax payments, are they responsible for any deficiencies or failure to make payments?
b. What should be the employer address used for correspondence with the IRS? Why do you think this provision exists?
c. Read the fiscal year 2012 investigation entitled "Two Former Executives of Payroll Services Company Sentenced for Conspiracy on Wire and Tax Fraud Charges." Briefly describe their fraud scheme. What was the amount of taxes they failed to remit to the IRS?
d. Review other investigations in 2012 and 2011. Are there other cases of fraud involving payroll service providers?