Is the IRS seeking unpaid payroll taxes from your company?
Probably one of the most tedious jobs you have as a small business owner is payroll. Not only is the work itself challenging with the number of deductions, taxes and benefits — different for each employee — but you may have an emotionally difficult time parting with the money.
It’s not that you begrudge your employees their fair wages, but if you are struggling to get your business off the ground or keep it afloat, it may be painful to see your potential profits going to payroll matters, especially those taxes you must withhold. Still, you understand the importance of sending the IRS your payroll taxes regularly and on time, especially if you are now facing accusations of intentionally failing to make those payments.
Who is responsible for the unpaid taxes in your business?
The IRS reserves the right to levy a serious penalty against those who intentionally withhold the payroll taxes they owe the government. In some cases, the IRS may fine the responsible person 100 percent of the unpaid taxes. This is how seriously the government takes it when businesses withhold money from their employees’ wages but fail to use it to pay their taxes.
Maybe you have hired someone to do your payroll for you, and you signed over authority to that person to manage the accounts and tax obligations. You may think this absolves you of any culpability for not paying payroll taxes, but this may not be the case. While the IRS may investigate your accountant or payroll manager first, they will also examine your role in the business, for example:
- Are you an officer or director in the company?
- Do you have a personal or financial stake in the company?
- Are you involved in the daily running of the business?
- Do you have authority to hire or fire employees?
- Do you make any decisions about the payment of debts or taxes?
- Do you have control over bank records or accounts management?
Any of these factors may place you under the microscope of the IRS and make you eligible for the penalties the IRS may impose due to unpaid payroll taxes.
The most important factor in the investigation into unlawfully withheld payroll taxes is the element of intention. In other words, the IRS will have to prove that you knew of your obligation to pay the taxes, yet you deliberately withheld the money. This is very different from someone who accidentally or unknowingly failed to pay the government. To ensure your rights are protected while your business is under investigation, having the assistance of a Nevada tax law attorney may be of great benefit to you.