Your Public Defender against the IRS when you need tax debt relief . . .
EMPLOYER PAYROLL TAXES
Serving clients in New York, New Jersey and Connecticut
Harborside Financial Plaza
Jersey City, NJ 07311
If you are a Boss, and employ people, you know that you have to take out the income and social security taxes from the paychecks of these people - - - AND send these taxes to the IRS or your State treasury.
- You are a TRUSTEE by taking these taxes.
- You hold these funds IN TRUST.
- This also applies to SALES taxes, which you collect from buyers, and then send on to the State treasury.
Normally, withholding these taxes and sending them to the right place is not a problem. That's why there are payroll services to handle this. Or you may be doing this in-house.
- The problem arises when times are tough, and those taxes represent several thousand dollars that could be put to work paying rent or paying other vendors just to stay in business
And this is exactly what happens with many struggling businesses. In legal terms, they are preferring other vendors over the IRS and State. This is simply theft.
After all, at the end of the year, when those W-2's are issued, the Taxpayer settles up with the IRS, and is either due a refund, or has a balance due.
Trust Fund Recovery Penalty
In all cases, that determination is based upon the amount of taxes withheld, and presumably paid into the Treasury.
If you, the Employer, are not making payments, then the IRS, by law, has to ignore that fact, and treat the taxes as if paid by the Employee. In other words, the IRS cannot simply tell the taxpayer that he owes a bunch of taxes, because his Boss never sent the taxes in.
This is how millions of dollars of taxes are simply lost each year. It's easier to see if the Taxpayer is getting a refund. A refund of what? Of his “tax payments”? The payments were never made to begin with. So, other US taxpayers are making up the difference.
To combat this, IRS has a powerful tool, called the Trust Fund Recovery Penalty. This allows IRS to hold the Employer personally liable for the taxes not paid.
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Employment Taxes and the Trust Fund Recovery Penalty (TFRP)
Failure to pay Employee Payroll Taxes can have serious consequences. If you owe back payroll taxes Kowal Tax Clinic can help you negotiate with the IRS and develop a plan to keep you from facing a lien or bank levy or possibly losing your business.