If I own a business but I have a payroll company deal with all payroll and tax information, am I responsible to pay for a miscalculation in employee tax payout?

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If I own a business but I have a payroll company deal with all payroll and tax information, am I responsible to pay for a miscalculation in employee tax payout?

Asked on June 7, 2012 under Business Law, New Jersey

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

The business is responsible for the miscalculation--even if someone else does the work for you, you cannot pass off your statutory responsibility for this.

However, you in turn can likely recover compensation from the payroll company. If the agreement with them provides that they will defend and indemnify you (like an insurance agreement, for their actions), they'd have to step in from the outset and take responsibility. Even without such a term or clause in the agreement between you and them, if someone is negligent in performing the work which you hired them to do, you can hold them liable for the costs or other losses they impose.

So if the service agreement so provides, you can have them respond to the problem, pay any damages or fines, etc., right from the outset; but even if the agreement does not so provide, you can sue them to recover your costs or losses if they won't make good voluntarily. But be aware that you must make sure the situation is corrected, since the law does make the business responsible.

 


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