What Your Payroll Provider Files, and What Stays Yours

"Our payroll company handles the taxes" is true until the day it is not. The IRS has a page on exactly that situation, and its first point is that the employer stays on the hook. This page separates what a provider takes off your desk from what legally stays on it, using the IRS's own pages and each provider's pricing page as read on October 27, 2026. We did not test the products.

For whom: an owner or office manager who pays a provider to run payroll. Not for: an employer in a PEO, which is a different arrangement (see payroll software vs a PEO).

What stays yours, according to the IRS

• Responsibility. "The employer is ultimately responsible for the deposit and payment of federal tax liabilities." If the provider does not pay, penalties and interest land on the employer's account. Publication 15 says the same for returns: using a third-party payer does not relieve the employer of the responsibility to ensure returns are filed and taxes paid on time.
• Form 8655 authorizes, it does not transfer. The reporting agent authorization lets a provider sign and file returns, make deposits and receive copies of IRS notices. The employer signs a statement on the form that it does not relieve them of the responsibility to ensure returns are filed and deposits made.
• Your address and your EFTPS login. The IRS strongly suggests not changing your address of record to the provider's, and recommends enrolling in EFTPS yourself to verify that payments arrive. "A red flag should go up the first time a service provider misses a payment or makes a late payment."

What four providers say they file

OnPay's main pricing page lists Form 941 and 943 support; the other pages do not name Form 941, and none names Form 940. Ask each provider to confirm in writing which returns it files, confirm whether the IRS has you on Form 941 or the annual Form 944, and ask for a copy of each filed return on its schedule.

Our pick

OnPay, because its pricing page states in one line that federal, state and local filings are included. If you have employees in a city or county with its own payroll tax, a published statement like that is what you want in writing; for the others, ask for confirmation for your specific jurisdiction.

• Pick Square Payroll instead if price matters most: it files federal and state taxes and lists full-service payroll at $35 a month plus $6 per person paid, below OnPay's $49 plus $6 per worker. Its pricing page does not name local taxes, but its New York help article documents New York City and Yonkers withholding, so check your own locality.
• QuickBooks Workforce fits a business whose books are already in QuickBooks Online; ask in writing what its tax penalty protection covers before relying on it.
• Homebase Payroll fits an hourly team already scheduling in Homebase; ask which local returns it files.

Check your provider every quarter

1. Log in to EFTPS with your own credentials and match each deposit to your payroll register.
2. Ask for each filed employment tax return on its schedule (Form 941 each quarter, or Form 944 each year if the IRS assigned it) and the filed 940 and W-3 every year.
3. Keep your own address of record with the IRS so notices reach you.
4. Open every IRS or state notice yourself; the IRS asks employers to contact it promptly when a notice may stem from a provider problem.

If you are deciding whether to use a provider at all, see do payroll yourself, use software, or hire a service.