As a California employer, you are responsible for making payroll tax payments to the California Employment Development Department and the IRS. These payroll tax deposits must be made regularly, often monthly or weekly as taxes are withheld from payroll disbursements. If you become behind on making these deposits, you could face serious consequences and personal liability for the money owed. Knowing your rights, obligations and options is crucial to avoid the consequences of not paying these taxes on time.
The Trust Fund Recovery Penalty
Not making payroll tax deposits in accordance with the law is illegal, and collecting them is a high priority for the IRS. Payroll taxes are considered a trust fund tax, which means you are withholding taxes from your employees in trust for the government. Delaying payment of these taxes means you have “stolen” money that belongs to the IRS and you may be subject to the Trust Fund Recovery Penalty (TFRP).
The TFRP can be imposed on anyone responsible for collecting or depositing payroll taxes. This could be the owner of a business, employee or payroll service provider – anyone who has been given this responsibility on behalf of the business and its employees. Once imposed, the IRS can pursue the TFRP through seizure of personal assets, even though the businesses that incurred the payroll taxes was a corporation, or other legal entity.
Steps to Take When Behind on Payroll Tax Deposits
If you are behind on payroll tax deposits, but have not yet been assessed a TFRP, you should act immediately to resolve the situation and prevent further payroll tax problems. If you can pay your payroll tax deposits in full, do so, and continue to make your deposits as scheduled in the future. However, if you are too far behind to make immediate payment or have already been contacted by the IRS regarding a TFRP, you will want a tax dispute lawyer on your side.
The IRS will aggressively pursue overdue payroll taxes, so you should not delay in getting legal advice regarding your situation. It is important to know what information you must disclose to the IRS and what is not required. At Brager Tax Law Group, we have experienced former IRS tax attorneys and that can help you navigate your options if you are behind on payroll tax deposits. We can help you determine what steps to take next, including negotiating a tax payment plan, offer in compromise or other alternatives to manage, reduce, or pay your tax debt. Taking the proper steps can put a stop to collection efforts and protect your business and personal assets.
Do not let payroll tax problems jeopardize your business or personal assets. Contact our tax specialists at Brager Tax Law Group at our office in Los Angeles at 310.208.6200.