Payroll Tax Liability of Third-Party Payors: Employment Law Manual Updated

Author: Rena Pirsos, XpertHR Legal Editor

The Internal Revenue Service has issued final regulations describing circumstances that will help determine which party is liable for an employer's employment taxes under a service agreement between the employer and a third-party payor. Obligations often covered in such agreements may include withholding employment taxes from employees' pay, making wage payments to employees, and timely reporting and remitting the employer's employment taxes to the appropriate government agencies. The final regulations, which took effect March 31, adopt proposed regulations issued in 2013, with a few changes based on public comments.

The Depositing and Reporting Withheld Taxes section of the Employment Law Manual has been updated to reflect these new regulations.