Small Business Owners $4.5 Billion Payroll Tax Problem
Every month, employers across the U.S. send money to the IRS to cover payroll taxes-levies drawn from employee pay to cover Social Security, Medicare, and unemployment insurance. Many botch the process. The IRS issued 6.8 million penalties totaling $4.5 billion related to the employment taxes for the year ending September 2013, according published data from the IRS (Internal Revenue Service Data Book, 2013 Publication 55B, Washington, DC, March 2014). The IRS is especially vigorous in going after payroll taxes withheld that somehow don’t get paid to the government. Why are businesses incurring so many penalties and fees?
As companies grow larger or smaller and hire different types of employees, the rules they must follow can shift. There are so many rules for a small business owner to stay on top of. The government adds penalties and interest to late payments; business owners should expect tax rules to change frequently.
These payroll taxes are called “trust fund” taxes by the IRS and need to be turned over to the agency on time and in full. Failure to do so may allow the IRS to collect from the business owner personally, even if they have a corporation or LLC – this is called a Trust Fund Recovery Penalty (Section 6672(a) of the tax code.
J. Nick Leitch & Company has the resources to stay current on tax rules and specializes in payroll processing. We can bring our expertise to your business, and alleviate your tax concerns. Call us for an complementary initial consultation.