The BIG IRS Problems Associated with Delinquent Payroll Taxes – Part One

Skipping payment of your payroll taxes is like poking the lion at the zoo through the bars. Eventually the lion, or in this case the IRS, is going to bite the stick or you. Correct withholding of payroll taxes from employee paychecks is a legal mandate for all employers in the United States. Employees logically count employers to hold the money taken out of their check for payroll taxes and then send it on time to the Internal Revenue Service. The IRS also counts on receiving those funds and it has severe penalties in place for companies that don’t comply with law and send the funds that have been set aside. The bottom line for the IRS when it comes to payroll taxes is if the funds held aside for payroll taxes are delinquent for 1 year or more, they will most likely see it as tax evasion and come after you with criminal charges.

Internal Revenue
Service Deadlines for Payroll Tax Deposits

The breakdown for filing IRS Form 941 is as follows: Employers
owing $1,000 or less are required to mail IRS Form 941, Employer’s Federal Tax
Return each quarter. The envelope containing the return requires a post mark of
Apr. 30, July 31, Oct. 31 and Jan. 31, depending on the quarter. Employers who
paid payroll taxes of $50,000 or less for the year before are required to file
Form 941 each month. Employers who paid in excess of $50,000 or more for the
year before are required to file form 941 for taxes owed twice a month. It is
mandated taxes owed have to be via the IRS’ Electronic Federal Tax Payment
System no later than 4 days after the payroll date.

Internal Revenue
Service Delinquent Payment Notices

When payroll taxes are late, if you filed form 941, the first thing to happen is the IRS will send you a bill for the taxes due.  The bill will indicate the taxes due plus penalties and interest.  The IRS will send you an invoice for payroll taxes due if you did not file the quarterly return that was due.  The IRS will begin collection activity if no response or payment is made regarding its 2nd late payment invoice for payroll taxes due. The IRS has the legal authority to seize business assets, inventory, accounts receivables and even business bank accounts to collect past due payroll taxes.

The Lesson for
Employers to be Learned About Delinquent Payroll Taxes

Payroll taxes must be paid on time. Responsible parties with
the duty to pay payroll taxes face severe penalties and potentially even
criminal consequences for unpaid payroll taxes.