15760 Ventura Blvd, Suite 610 Encino, CA 91436
15760 Ventura Blvd, Suite 610 Encino, CA 91436
Personal, Affordable Payroll Services, Bookkeeping, and Tax Processing for Small Business throughout Los Angeles County.

Employers: Take Your Payroll Taxes Seriously, or the IRS Will

Being detailed and diligent about your company’s payroll taxes is an important part of owning your own business. The term payroll tax refers to two sets of taxes:

  • state and federal taxes, as well as social security and Medicare taxes, that employers withhold and pay on behalf of their employees (i.e. sometimes called pay-as-you-go or withholding taxes);
  • and additional taxes employers pay for their employees, which include matching the social security and Medicare taxes paid by employees.

Employers also are required to pay unemployment taxes and worker compensation. To learn more about payroll taxes and requirements, click here.

A recent Forbes article brings to light an important aspect of payroll taxes: there are unforgiving IRS penalties for not handing them over at all or even in a timely manner. The act of keeping payrolls taxes taken from employee wages from the IRS is seen as a particularly egregious offense.

Companies have sometimes reallocated these funds to pay off other debts in order, they say, to keep the business afloat. This is not a valid excuse.

In such cases, the IRS will target any “responsible person” at the company (e.g. director, officer or signatory) who has the authority to sign for checks or is part of ownership. Regardless of your knowledge of (or lack of it regarding) your company’s tax payment shortcomings, any and/or all responsible persons can be held liable. There is a 100-percent penalty, or Trust Fund Recovery Assessment, provided by Section 6672(a), as the article notes.

In addition to any or all responsible persons, the IRS will try to collect withheld taxes from the company. They can attempt to shutter a business or pursue an injunction to stymie the situation depending on how bad it is. Criminal penalties also can be sought.

Companies can avoid these issues by using payroll services Los Angeles like ATPP (Accounting Taxes Payroll Partners) in Los Angeles. Our staff of accountants understands the ins and outs of payroll taxes. We are particularly sensitive to the needs of small businesses. If you are looking for a detailed and reliable payroll partner, call 818-436-2775, or email us to request a quote.