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I haven't paid my business employment or payroll taxes

Employment taxes are:

  • The amount you should withhold from your employees for both income and social security tax, plus
  • The amount of social security tax you pay on behalf of each employee.

To encourage corporate business owners to make prompt payment of their employees withheld income and employment taxes, including social security taxes or collected excise taxes, Congress passed a law that provides for the Trust Fund Recovery Penalty. (These taxes are called trust fund taxes because you the employer actually hold the employee's money in trust until you make a federal tax deposit in that amount.) If the IRS plans to assess you for the trust fund recovery penalty, you will receive a letter stating that you are a responsible person. You have 30 days after the IRS sends the letter to appeal. If you do not respond to the letter, the IRS will assess the penalty against you and send you a Notice and Demand for Payment.

Please note, the IRS can apply this penalty whether or not you are out of business. A responsible person is an individual or group of people who had the duty to perform and the power to direct the collecting, accounting, and paying of trust fund taxes. This person may be:

  • an officer or an employee of a corporation.
  • a corporate director or shareholder.
  • a member of a board of trustees of a nonprofit organization.

If you do not pay your employment taxes on time the IRS will charge you interest and penalties on any unpaid balance.

What can I do?

Download the various business forms to complete your overdue payroll and employment taxes.

Contact a qualified Enrolled Agent , CPA, tax attorney or a tax resolution company that is "admitted to practice before the IRS".

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