If you are an employer you must withhold Social Security and Medicare taxes from your employees’ paychecks along with the required amount of federal income tax. Employers are required to pay these taxes to the government on a semiweekly or monthly basis depending upon the total amount of payroll taxes you collect. Sometimes businesses get behind on their bills and are unable to pay the required payroll taxes. IRS has launched a new initiative to quickly identify businesses that are late or behind on their payroll taxes. In most cases, IRS will assign a Revenue Officer to the case who may show up at your place of business unannounced! The Revenue Officer will ask for the financial information of the business to determine if the business has the ability to pay the back payroll taxes. If the business cannot pay the back payroll taxes the IRS may assess the Trust Fund Recovery Penalty against the owners and/or officers of the business. This means you, as the owner of the business may be held personally liable for a portion of the back payroll taxes. Ms. Pless has worked with many of the local Revenue Officers in the Tampa Bay area and frequently represents businesses and individual owners through this scary process.
If the amount of the unpaid payroll taxes is $25,000 or less and the business is current with its filing requirements and current on its federal tax deposits IRS will normally allow the business to pay back the payroll taxes over a 2 year period. This is referred to as an In-Business Trust Fund Express Installment Agreement. If your business owes more than $25,000 in back payroll taxes the business will need to provide a collection financial information statement to the Revenue Officer who will determine the amount the business must pay each month in order to stay in business. Don’t take this lightly – IRS does have the authority to close down a business that is not in compliance with its employment taxes.