Bill > HB1047

This bill requires payroll service providers to offer business clients the option to hold their payroll funds in a bank account that is owned by the business client and insured by either the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Share Insurance Fund. The bill also mandates that contracts between payroll service providers and business clients must include a provision stating that if the payroll service provider fails to deposit employer withholding taxes on time due to their own error, they must reimburse the business client for any penalties or interest assessed by the tax department. Additionally, payroll service providers will be required to obtain a performance bond equal to the total annual estimated payroll taxes of their business clients. These provisions are set to take effect on July 1, 2026, and are designed to provide greater financial protection and transparency for businesses using third-party payroll services by ensuring that client funds are securely managed and potential financial risks are mitigated.

Business and Industry

https://iga.in.gov/legislative/2026/bills/house/1047/details