San Diego Payroll Tax Lawyer
If your business has employees, you are obligated by federal law to withhold from employee paychecks certain sums for withheld tax and Social Security. The IRS refers to these sums withheld as trust funds, because these funds are government funds which must be remitted on a timely basis to the IRS.
It is not uncommon for a business to encounter a shortfall in revenue, such that in order to keep the doors of the business open, funds that are otherwise payable to the IRS are diverted to the payment of other expenses. The first time that a business owner chooses to skip the payment of the withheld payroll tax, no alarm bell sounds and no notices are received.
My clients with payroll problems have consistently recounted that their intent was to skip just one payment of payroll tax and make up for the nonpayment right away. Experience has shown that in a typical situation, there are several instances of the failure to remit the payroll tax, which most certainly will cause the IRS to pay you a visit.
It is possible to work out a payment plan on overdue payroll taxes, but there cannot be any future payroll tax delinquencies. If a business consistently fails to remit payroll taxes when due, the IRS has legal authority to shut down the business and sell assets to generate revenue for the overdue payroll tax.
A troublesome aspect of the failure to pay corporate payroll tax relates to the assessment of what the IRS refers to as the “trust fund recovery penalty.” In assessing the trust fund recovery penalty, the IRS will transfer personal tax liability to responsible persons within the corporation with regard to withheld taxes and Social Security that were not paid by the corporation.
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