An employer has a responsibility to withhold income taxes and payroll taxes from the employees wages and remit it to the IRS. These taxes are commonly referred to as Trust fund taxes because they are held by the employer "in trust" until it is paid to the Treasury through the federal tax deposit system. When these monies are not paid, it has serious consequences for the employer because the government considers it as stealing. Delay in paying these taxes or failure to pay, whether willful or otherwise, may subject an employer to criminal and civil sanctions including large penalties.
The Trust Fund Recovery Penalty which is equal to 100% of the unpaid trust fund tax is asserted against those who are considered by the IRS as the person or persons responsible for collecting or paying these taxes and who willfully fail to collect or pay them. For example, if you used a million dollars of trust fund taxes to pay other creditors instead of paying the IRS, the total amount you owe the IRS will be two million dollars including penalty.
In addition the IRS can take collection action against your personal assets and file a tax lien, levy or seize your personal assets. Such large penalties and collection actions can put a business and a responsible person in financial jeopardy. IRS watches employment tax compliance closely and is very aggressive in enforcement and collection efforts.
If you are experiencing payroll tax problems contact us immediatley at 602-904-6535 or schedule a free initial consultation. We can work out a resolution plan that is right for you and help you get back into good terms with the IRS quickly.