The tax that a company withholds from the employees paychecks to pay the IRS is known as the ‘trust fund’ as it holds the money in a trust for the government or also commonly known as the payroll taxes. If any company fails to pay these payroll taxes to the IRS, they may have Payroll Tax Problems.
Types for Payroll Tax Problems
Payroll tax problems can be of different kinds; the common ones being:
Any or all of the above can cause a company or an individual to have payroll tax problems.
Reasons for Payroll Tax Problems
Payroll tax problems usually occur as a result of the following actions:
If your company has payroll tax problems for any reason, the IRS can hold you as a ‘responsible party’ in the non-payment of payroll taxes.
What is a Responsible Party?
Any person who is directly or even indirectly related to the payroll tax problems can be held liable as a ‘responsible party’ by the IRS if they can prove the following two conditions:
Thus any person in the company, or even a person who is not an employee of the company that withheld the payroll tax; but if they were ‘responsible’ and knew about the non-payment and ‘willingly’ did nothing, then they can be liable for penalty and recovery of the payroll taxes.
Penalty for Payroll Tax Problems
The IRS can recover the money from anyone or all the ‘responsible parties’ for non-payment of payroll taxes. Such a penalty is based on the amount that should have been collected as payroll taxes or was actually collected and not paid. Thus it is a 100% penalty. This is a civil penalty and not a criminal one.
Any person who finds himself with payroll tax problems should seek the help of a tax attorney who can negotiate with the IRS and have the taxes paid in a systematic manner and with the least penalties possible.
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