By Preston Lee
Many business owners are unaware that the IRS gives payroll taxes priority over actions like collecting unpaid income taxes. Hence, a lot is at stake if payroll taxes have perhaps been disregarded or improperly managed. Once the IRS becomes aware that payroll taxes have been improperly handled, a full investigation will be conducted. The process often entails in-person interrogations with several corporate employees, and if there is even the slightest indication of fraud, a standard IRS investigation can quickly transform into a federal criminal inquiry.
Penalties
The amount of the fine is equivalent to the unpaid trust fund tax balance, and it is based on the unpaid amount of collected excise levies. Trust fund taxes may rise exponentially over time in addition to the back taxes and interest that are due on past-due trust fund taxes. The penalties cannot be discharged in bankruptcy, which makes matters worse.
Even while the financial consequences of not paying trust fund taxes can be significant, the possibility of criminal charges and jail time for unpaid payroll taxes makes the situation even worse. If you or your business has received notification of an IRS inspection, you must contact a knowledgeable tax attorney. Mistakes in the process could result in other consequences like the confiscation of assets, financial penalties, and even jail time.
Tips to Avoid Payroll Taxes
- Businesses can avoid employment tax fines by streamlining their payroll procedures to ensure that all wages given to employees and all taxes deducted from wages are promptly returned and reported to regulatory bodies.
- Employers can learn about modifications to tax regulations and new form submission deadlines by reading the IRS’s press releases and suggestions, which are frequently published.
- Budgeting without accounting for payroll expenditures might result in financial shortages and the inability to pay taxes. Therefore, many companies create separate bank accounts specifically for payroll, which makes it easier for them to control tax withholdings and payments.
The best way to avoid any unpaid payroll taxes and penalties is by hiring a tax attorney specializing in this field. With their expertise and knowledge, you can get through any trouble.
