📝 Overview
When you switch to DaySmart Payroll mid-year, there may be payroll taxes that have been incurred but not yet paid because their due dates have not arrived yet. This article explains how those outstanding liabilities are handled during the transition.
🧠 What Is an Unpaid Tax Liability Debit?
The Unpaid Tax Liability Debit is a one-time withdrawal that covers any outstanding payroll tax liabilities carried over from your previous payroll provider. These may include:
Federal Unemployment Tax (FUTA)
State Unemployment Taxes
Local Taxes
Federal and State Income Taxes (depending on timing and filing frequency)
⚠️ Even if you are starting with DaySmart Payroll at the beginning of a new quarter, a collection may still be required for taxes like FUTA, particularly if your business pays those taxes annually or does not meet the quarterly filing threshold.
📆 When Does the Debit Happen?
DaySmart Payroll processes the Unpaid Tax Liability Debit approximately 7 to 10 business days after your first pay date. This ensures funds are available before tax deadlines, helping you avoid late payment penalties.
🔔 How You Will Be Notified
Before any funds are withdrawn, DaySmart Payroll will send a detailed Unpaid Tax Liability letter with a full breakdown of the debit amount. This gives you time to:
Review the details
Validate the amounts
Identify any adjustments that may be needed
🛠️ Can the Debit Amount Be Adjusted?
Yes. If any of the listed liabilities have already been paid through your previous provider, contact DaySmart Support and those items will be removed from the total before the debit is processed.
To validate the liability amount:
Pull the final payroll journal or tax liability report from your prior provider.
Compare it line by line with the breakdown in the Unpaid Tax Liability letter.
If a tax has already been paid, notify DaySmart Support right away so the total can be adjusted before the debit runs.
❓ Frequently Asked Questions (FAQs)
Find answers to common questions or additional details that may not be covered in the main instructions.
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Does every employer transitioning to DaySmart Payroll receive an Unpaid Tax Liability Debit?
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Not necessarily. The debit only applies if there are outstanding payroll tax liabilities that have been incurred but not yet paid at the time of your transition. If all taxes were paid in full by your previous provider before you switched, no debit will occur.
What if I already paid some of these taxes through my previous provider?
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Contact DaySmart Support with documentation from your prior provider confirming the payment. Any liabilities that have already been paid will be removed from the debit total before funds are withdrawn.
What report should I pull from my previous provider to validate the liability amount?
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Request the final payroll journal or tax liability report from your prior provider. Compare it line by line against the breakdown in the Unpaid Tax Liability letter. Look for any overlap where a tax appears in both documents, and flag those items for removal.
Will I have enough time to review the letter before the debit happens?
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Yes. The Unpaid Tax Liability letter is sent before funds are withdrawn, giving you time to review the breakdown and reach out if any adjustments are needed. The debit itself occurs approximately 7 to 10 business days after your first pay date.
What happens if I do not respond or request any adjustments?
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If no adjustments are requested, the debit will process as outlined in the letter. To avoid being charged for taxes that were already paid, review the letter carefully and contact DaySmart Support before the debit date if anything needs to be corrected.