Third-Party Liability

Written by True Tamplin, BSc, CEPF®

Reviewed by Subject Matter Experts

Updated on March 29, 2023


Companies may find that they have liabilities to an agency or other organization with which it has had no direct transaction. This is known as third-party liability, and it can arise for various reasons.


Suppose that a company, as a third party to transactions between its employees and the government, 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.

Third-Party Liability FAQs

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website or view his author profiles on Amazon, Nasdaq and Forbes.