What Is Third-Party Liability

True Tamplin

Written by True Tamplin, BSc, CEPF®
Updated on August 25, 2021


For various reasons, a company may find that it has liabilities to an agency or other organization with which it has had no direct transaction.


For example, as a third party to transactions between its employees and the federal government, the firm withholds income and social security taxes from paychecks. Until those amounts are paid, the firm owes them to the government. Similar arrangements exist for sales taxes collected from customers and other payroll withholdings for such things as union dues, payroll savings plans, charitable contributions, and insurance premiums.

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