Payroll Tax Problems
The IRS looks at the failure to remit employee withholdings as the employer using someone else’s money as a short term, or in some cases, a long term loan. The IRS takes payroll tax issues very seriously. Eventually, if you, the owner of the business, continue to not remit the withholdings, the IRS will hold you, the owner, personally responsible for the amount withheld. This is called the trust fund recovery piece, or the 100% penalty. Once the amount due is assigned to you personally, the IRS has the right to seize personal assets, including real estate, cash accounts, mutual fund and any other asset of value (within certain guidelines) along with business assets to satisfy the amount due.
Payroll tax penalties are the most oppressive penalties and even the smallest of withholding amount can turn into tens of thousands of dollars if not immediately addressed. Also, payroll taxes, once assigned to the owner personally, cannot be discharged in bankruptcy. Basically, if you owe payroll taxes, the IRS makes it as tough on the business owner as possible.
Simply put, if you owe for back payroll tax withholdings, you need to deal with it today. This is the one part of the tax code where the IRS has tremendous latitude to aggressively try and collect the amount due.
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