Payroll taxes refer to specific taxes withheld from an employee’s income. This includes Social Security and Medicare taxes. All business owners are legally required to withhold these payroll taxes from the paychecks of their employees. These funds are then sent to the IRS.
If you do not report the payroll taxes withheld or deposit the funds in full, you may be subject to criminal and civil sanctions for willfully failing to pay employment taxes.
Unpaid Payroll Tax Penalties
The IRS can impose numerous penalties if you do not meet your payroll tax duties. For example, if you fail to file Form 941 on time, you could face the following tax penalties:
- 2% (1-5 days late)
- 5% (6-15 days late)
- 10% (16+ days late)
- 15% (10+ days after the first IRS bill)
In addition to the failure-to-file penalty, you will also be charged interest on any unpaid payroll taxes. If you did not file your quarterly return as required, The IRS will estimate your taxes owed and send you a bill. If you do not respond, you could face various collection actions. This may include seizure of your business bank accounts, accounts receivables, inventory, and other business assets to satisfy the payroll tax debt.
In cases where the IRS believes you willfully neglected to report or submit your payroll taxes, you may be hit with the Trust Fund Recovery Penalty (TFRP). This is equal to 100% of the payroll taxes owed, including any penalties and interest.
What Is Payroll Tax Relief?
If you are behind on your payroll taxes and the IRS is threatening to start collection actions, get help immediately. At Tax Assistance Group, our payroll tax relief services can help keep the IRS off your back. Depending on your specific situation, you could be eligible for an Offer in Compromise or be placed in a Currently Not Collectible status. In most cases, our clients can remedy their overdue payroll taxes by setting up an affordable payment plan.