Payroll taxes are taken very seriously by the IRS. What happens if you fail to pay payroll taxes or file them on time? You will get hit with a Trust Fund penalty.
A Trust Fund penalty is a 100% penalty on the person who is responsible for payment of withheld federal payroll taxes and FICA taxes from the employees of a company. The IRS views failing to pay payroll taxes as the cardinal sin of tax delinquency because a large portion of the payroll taxes are your employees’ withholdings, not your own money.
In other words, not paying your company’s payroll taxes is tantamount to stealing your employees’ money. As a result, penalties for not paying your company's payroll taxes and filing your payroll tax returns are much more severe than other types of penalties. They can drastically multiply and grow the amount you owe in a very short time.
If you’re behind on paying payroll taxes on time for your company, watch out. If you are a control person, and not an officer or owner, you are also liable for these taxes personally. The IRS will seize your personal assets, bank accounts, and put your employer out of business rather than let you continue to avoid paying payroll taxes.
A Trust Fund penalty is a 100% penalty on the person who is responsible for payment of withheld federal payroll taxes and FICA taxes from the employees of a company. The IRS views failing to pay payroll taxes as the cardinal sin of tax delinquency because a large portion of the payroll taxes are your employees’ withholdings, not your own money.
In other words, not paying your company’s payroll taxes is tantamount to stealing your employees’ money. As a result, penalties for not paying your company's payroll taxes and filing your payroll tax returns are much more severe than other types of penalties. They can drastically multiply and grow the amount you owe in a very short time.
If you’re behind on paying payroll taxes on time for your company, watch out. If you are a control person, and not an officer or owner, you are also liable for these taxes personally. The IRS will seize your personal assets, bank accounts, and put your employer out of business rather than let you continue to avoid paying payroll taxes.
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Failing to pay payroll taxes is the same as stealing money from your employees.
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The IRS will go after the company responsible for the payroll taxes and the control person at the same time. A control person may simply be the bookkeeper, the person who signs the checks, or another responsible person, even if that person is not the owner or officer of the company.
The Trust Fund penalty is 100% of the withholdings of Federal and FICA from the employee, plus interest. Other payroll tax penalties to the employer include:
The Trust Fund penalty is 100% of the withholdings of Federal and FICA from the employee, plus interest. Other payroll tax penalties to the employer include:
- Failure to file the payroll tax returns on time is 5% per month, up to 25% of the taxes.
- Failure to electronically pay your taxes on time can be 10% of the taxes not paid. The schedules of payment due dates depend on the amount of taxes due. This can be within three days of your payroll dates, up to once per quarter if the taxes are very low. Many small employers pay monthly.
Actual due dates and more details are available at www.IRS.gov. This is a lot of information, but the point is you should never get behind on payroll tax payments or filings. The IRS takes payroll taxes very seriously!
If you have any payroll tax problems or receive a collection notice for payroll taxes personally, you should hire a qualified tax problem specialist. We have experience and strategies for getting tax releases and negotiating with the IRS. Please give me a call or send me an email. I would be happy to help you with any questions!
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