According to Headliner Volume 243 posted to the IRS website at www.irs.gov/businesses/small/article/0,,id=186029,00.html , outsourcing payroll duties can be a sound business practice. However, the employer is ultimately responsible for the deposit and payment of its federal tax liabilities. Even though the third-party is making the deposits, the employer remains the responsible party. If the third-party fails to make the federal tax payments, the IRS may assess penalties and interest on the employer’s account. The employer may also be held personally liable for certain unpaid federal taxes.