Understanding the IRS Payroll Tax Collections
Failing to timely pay over payroll taxes can result in significant penalties and interest, sometimes in excess of the initial tax that wasn’t paid.
The government may be able to pursue the business owner personally for the business’s unpaid payroll tax liabilities.
The Internal Revenue Code gives the IRS broad powers with regard to unpaid payroll tax liabilities. As a result, the IRS is particularly aggressive in pursuing businesses for unpaid payroll taxes. The government may be able to pursue the business owner personally for the business’s unpaid payroll tax liabilities. This is done by assessing the “trust fund recovery penalty” against a “responsible party”. Trust fund taxes are the income and social security taxes an employer withholds from the wages of employees. Although corporate officers, directors, stockholders and employees are normally protected from personal liability for the debts of their corporations, the IRS can assess personal liability against the so-called “responsible persons”.