NPRC Studies & Recommendations

Recommendations and Considerations for Bulk Filing Transmission and Security Protocols

One of a Payroll Service Provider's (PSP) primary responsibilities is to send payroll tax information and tax payments to tax authorities on behalf of their clients. Due to the increased focus on data security, many taxing authorities are understandably concerned about releasing sensitive data to any potentially unauthorized recipients. As a result, some states now restrict known PSPs from performing high-volume batch operations using automation, and are even rejecting otherwise-valid tax returns due to concerns about security. Employers using PSPs often must follow complicated steps to comply with different state requirements to authorize a PSP to file and pay on their behalf. This document is intended to provide best practices to tax authorities that are modernizing their tax systems and/or security protocols in order to reduce risk of disclosure to bad actors, but to also allow for the critical reporting of payroll related data from PSPs.