Last updated: September 7, 2026
The IRS issued its annual National Preparedness Month reminder on September 3, and most of it is what you would expect: put documents in a fireproof box, scan the paper, photograph the equipment. Buried in the employer section is a question that has nothing to do with floods or fire, and it is the one most likely to cost a small business real money — does your payroll service provider carry a fiduciary bond?
The short answer
IR-2026-104 advises employers to review payroll protections and confirm whether their payroll provider holds a fiduciary bond. The bond matters because the IRS holds the employer — not the provider — ultimately responsible for federal payroll tax deposits. If the provider fails to remit, you owe the tax plus penalties and interest.
What happened
The IRS released IR-2026-104 on September 3, 2026, during National Preparedness Month. It is a reminder release, not new law. The consumer-facing guidance covers storing originals in waterproof and fireproof containers, keeping scanned copies in cloud storage, and photographing or filming property to establish a baseline for valuation after a loss.
“Preparing now can make a real difference when a disaster strikes.” — Frank J. Bisignano, IRS Chief Executive Officer
The employer paragraph is where the release goes somewhere different. It directs businesses to review payroll protections, confirm the fiduciary bond question with their provider, and use their Business Tax Account to monitor balances and payment history. EFTPS users are told they can continue paying federal taxes through that system.
Why it matters
Payroll outsourcing does not transfer payroll tax liability. The IRS states the rule plainly on its outsourcing payroll duties page:
“The employer is ultimately responsible for the deposit and payment of federal tax liabilities. … If the third-party fails to make the federal tax payments, then the IRS may assess penalties and interest on the employer’s account.”
That is the whole exposure in two sentences. You wire the money to the provider, the provider does not send it to Treasury, and the assessment lands on your EIN. A fiduciary bond is the instrument that gives you something to recover against when that happens. No bond, and your recourse is whatever is left of the provider.
Three more items from the same IRS page are worth acting on the same afternoon:
| IRS guidance | Why it protects you |
|---|---|
| Do not change your address of record to the provider’s | IRS notices go to the provider instead of you — including the first notice that a deposit was missed |
| Register for your own EFTPS PIN and verify payments periodically | Lets you confirm deposits independently rather than trusting the provider’s report |
| Treat a first missed or late payment as a red flag | The IRS says so directly; provider failures rarely start with the large one |
| Confirm the fiduciary bond (IR-2026-104) | Determines whether you can recover if deposits stop |
What this means for small business owners
- Email your payroll provider today and ask, in writing, whether they carry a fiduciary bond and for how much. Keep the reply. A provider that cannot answer this quickly has told you something.
- Check your IRS address of record. If it is your payroll provider’s address, change it back to yours. You want to be the first to know about a missed deposit, not the last.
- Get your own EFTPS PIN and spot-check deposits quarterly. Match what EFTPS shows against what your provider reported. Ten minutes a quarter is the cheapest fraud control available to a small employer.
- Open a Business Tax Account and reconcile the balance. The IRS is pointing employers at it in this release for a reason — it shows what the IRS thinks you owe, which is the only version that matters in a dispute. We covered the August expansion of Business Tax Account features separately.
- Then do the actual disaster part. Scan prior-year returns, depreciation schedules, and the fixed-asset list to cloud storage, and walk the premises with your phone camera. IRS Publication 584-B is the casualty loss workbook built for businesses; Publication 547 covers the deduction rules.
Frequently asked questions
Am I liable if my payroll company doesn’t pay my payroll taxes?
Yes. The IRS states the employer is ultimately responsible for depositing and paying federal tax liabilities, and may assess penalties and interest on the employer’s account if a third party fails to pay.
What is a fiduciary bond for a payroll provider?
It is a surety bond covering losses caused by the provider’s failure to handle client funds properly. IR-2026-104 advises employers to confirm whether their provider holds one, because it determines what an employer can recover if deposits are not remitted.
How can I verify my payroll taxes were actually deposited?
Register for your own EFTPS PIN and check deposit history directly, and reconcile against the balances shown in your IRS Business Tax Account. Do not rely solely on your provider’s reporting.
Should my payroll company be my IRS address of record?
No. The IRS strongly suggests employers not change their address of record to the provider’s, because it limits the employer’s ability to be informed of tax matters — including missed-payment notices.
Which IRS publications cover business disaster losses?
Publication 547 (casualties, disasters and thefts), Publications 584 and 584-B (casualty loss workbooks, with 584-B for businesses), and Publication 3067 (IRS disaster assistance).
The bottom line
The scanning and the fireproof box are good advice you have heard before. The fiduciary bond question is the one that is genuinely new to most owners, takes one email to answer, and has a five- or six-figure downside if the answer turns out to be no at the wrong moment. Send that email this week, then go photograph the equipment.
Sources: IRS IR-2026-104; IRS — Outsourcing payroll duties.
