The Internal Revenue Code requires all employers to withhold taxes (Social Security, Medicare, and income) from the wages of each and every employee. The taxes withheld from an employee’s wages are frequently referred to as “withholding taxes” or “Trust Fund taxes.” The term Trust Fund Taxes is used because the tax amounts withheld are held in trust by the employer until they are paid over to the IRS.
Federal law requires that taxes withheld, along with the employer’s share of the Social Security tax, be deposited by the employer into a qualified bank or financial institution for transfer to the IRS. Additionally, every employer is required to file Employer’s Quarterly Federal Tax Returns (Form 941) and an Employer’s Annual Federal Unemployment Tax Return (Form 940). The withholding and filing requirements apply to all employers regardless of whether their business structure is Sole Proprietorship, Partnership, Limited Liability Company, C Corporation, or S Corporation.
The IRS usually takes a most aggressive approach in pursing employers who fail to properly withhold and pay over withholding taxes. These cases are handled by Revenue Officers with specialized training and experience in payroll tax matters. Revenue Officers are authorized to pursue collection from the business itself and personally from its officers, directors, owners, or any responsible individuals. The IRS has the authority to close the business and liquidate its assets, and to refer the case to the IRS Criminal Investigation Division with the recommendation that criminal charges be brought.
We regularly represent employers in seeking solutions to payroll tax problems. We first work to keep your business open and then work to resolve your tax liability. Please call Mr. Brown directly at 817.870.0025 or click here for a confidential consultation regarding your payroll tax problem.