Articles Tagged with payroll tax problems

Can an Employee Be Held Liable for Their Employer's Unpaid Taxes
An employee can be held liable for their employer’s unpaid taxes in certain situations. While most businesses withhold their employees’ income and payroll taxes and then transmit them to the IRS, there are cases where employers either do not withhold taxes or do not give the withheld money to the IRS. Employees need to be aware of their responsibilities as both taxpayers and a person responsible for collecting and paying a business’s income or payroll taxes.

Liability for Employee’s Unpaid Taxes

If your employer fails to withhold income or payroll taxes from your paycheck, you are still responsible for paying these taxes to the IRS. If you do not pay these taxes personally, you may face tax penalties, and you may not be eligible for Social Security, Medicare, or unemployment benefits.

payroll tax problems
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).