The IRS requires all employers to withhold certain taxes including Social Security, Medicare, and income taxes for all its employees and submit these as payroll taxes. Most businesses must make a federal tax deposit within a few days after the pay date of their payroll checks, so paying payroll taxes should be a critical part of routine operations for every business. However, some business owners fail to submit payments, and experience major payroll tax problems with the IRS.
When a business is lacking proper cash flow they will sometimes rely on money that’s been withheld for payroll taxes as a means to pay expenses. These business owners don’t consider that the money withheld from an employee’s wages does not actually belong to the business at any time. In the eyes of the IRS, it’s their money and if you don’t hand it over promptly you’re basically stealing from them.
The IRS takes unpaid employment taxes very seriously and will aggressively pursue any business that fails to pay their payroll taxes on time. Failure to file and pay your payroll taxes will initially result in mounding penalties. If you owe delinquent payroll taxes and don’t address the problem, the IRS could eventually shut down your business and sell off the assets to pay the tax debt. Since the withheld funds are considered the possession of the government, failure to deliver this money to the IRS is considered a form of theft and could incite criminal charges including a fine or even imprisonment.
If your business owes outstanding payroll or employment taxes, the IRS may go after individuals in the company to recover the unpaid withholding taxes. The Trust Fund Recovery Penalty was instituted to recover back payroll taxes more quickly and efficiently. Employment taxes are held in trust by an employer until a federal tax deposit is made to the IRS. If an individual willfully and voluntarily used funds that were meant to be paid as withholding taxes to pay other company expenses, the IRS may determine that the person is responsible to pay the back taxes. You can be held personally liable for the back payroll taxes if you are an officer of a corporation, a partner, a sole proprietor, or an employee of any form of business. These high penalties can affect your credit and have a significant impact on your finances.
If you owe payroll taxes you might not hear from the IRS right away but make no mistake, they will take notice and the penalties assessed will compound quickly. Businesses that wait to take action may end up facing penalties that are greater than the actual amount of payroll taxes owed. If your business has fallen behind on employment taxes, call Federal Tax Advocates, LLC and get the payroll tax help you need today. We analyze your case to determine if you qualify for:
Contact us at 1-855-5FEDTAX (855-533-3829).