Payroll Tax Issues: A Serious Matter


Many believe the IRS is not as fast as it pretends to be. It can take years and years for them actually to catch on and do something about unpaid income taxes. That’s when they realize that there is a problem that needs to be answered. After that, action may take a few more months or years. With payroll taxes, it’s an entirely different story.

Payroll tax problems can get you and your business in great trouble. For some reason, the IRS is exceptionally agile in coming down on businesses with payroll tax problems. The worst part is that it is not easy to get away with. The IRS can shut your business down and liquidate all the assets. Very few companies had the opportunity to pay the due amount or penalties.

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IRS is Not a Lender – Tax is Not Your Bank Payment

Come to think of it, many tax-related issues will be resolved if people stop thinking of the IRS as a bank. Owing the IRS is not similar to owing a lender or bank. The IRS is a federal body, and it has the right, granted by the government, to reach into your account and take the money you owe them and maybe even more. More importantly, they will not just take your money to the bank. Everything you own, including your 401k, cars, home, accounts receivables, and the value of your life insurance, is at risk. If you are found guilty of tax evasion, you will end up in jail.

What Can Happen If You Fail to Pay Payroll Taxes?

When we say the IRS can shut down your business, we mean putting padlocks and chains on the doors. The IRS even has the right to do it without a court order. And there is no way you can evade them by using bankruptcy as an excuse. Everyone, from owners to partners and CEOs, is liable for the offense. All of your assets are seized. If they manage to find any evidence of willful tax evasion or fraud, your payroll problem will turn into a federal crime.

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The Possibility of Being Held Responsible

When faced with payroll tax problems, your first instinct should be to clear the IRS’s two-pronged test. This test is devised to determine who is responsible for the problem. First, the IRS must know if you must account for and pay payroll taxes. Second, it needs to know if the failure was deliberate.

There have been cases where a company’s accountant or bookkeeper was held responsible. Hiring reliable CPAs, bookkeepers, and accountants is very important.

Why Is the IRS So Serious About Payroll Taxes?

Unlike your taxes, payroll taxes are trust fund taxes. It is the money others have entrusted you with. Not paying that money to the IRS is like stealing money from your employees and the IRS simultaneously. It is an employer’s job to pay an employee’s income tax and their FICA. The IRS doesn’t consider it your money. It considers your employer’s money. Not delivering it to the intended authority is theft. Due to this reason, the IRS is quick to shut down businesses because of payroll tax problems.

The only way to get out of a payroll tax problem is to hire a reasonable attorney. However, prevention is much more effective than any solution. So, hire a CPA and bookkeeping firm that can help you with your taxes before you do any damage control.

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In conclusion, the consequences of neglecting payroll tax obligations are severe and can lead to the demise of a business. Unlike income taxes, the IRS swiftly acts upon payroll tax issues, often resulting in business closures and asset liquidation. Understanding the gravity of these matters is crucial; the IRS does not treat unpaid payroll taxes lightly and can hold individuals accountable, regardless of their role in the company. It’s essential to promptly address payroll tax responsibilities and seek professional assistance to ensure compliance and avoid such dire situations. Prevention through proper tax management is key to safeguarding your business from costly repercussions.

ADP. Payroll – HR – BenefitsAbout Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.Download A Free Financial Toolkit