Proper calculation and prompt remittance of payroll taxes is an important function for all businesses with employees. Federal law requires business operators of any size or organizational structure to conduct an accurate accounting and prompt remittance of mandatory withholding from workers’ wages. It’s the law!
A clarification of tax terminology
State and local laws often mandate a myriad of wage deductions in addition to traditional income, Social Security, and Medicare tax withholding. Such legally proscribed subtractions from employee compensation are collectively known as “payroll taxes” or “employment taxes.”
Bureaucratic Business Burdens
The US Internal Revenue Code requires employers to establish and maintain specialized deposit accounts at qualified financial institutions for facilitating payroll tax transfers to the IRS. Moreover, IRS Forms 940 and 941, respectively known as the Employer’s Annual Federal Unemployment Tax Return (FUTA) and an Employer’s Quarterly Federal Tax Return, must accompany each payroll tax payment.
Noncompliance Carries Stiff Pecuniary Penalties
Failure to properly account for and submit payroll taxes in a timely manner is considered to be a serious violation of federal law that triggers enormous penalties, including late fees and accruing interest. In fact, punitive financial assessments often exceed the original underlying tax obligation.
Delinquency Sparks Perpetual Pursuit and Economic Bondage
IRS agents are among the world’s most persistent bill collectors (not to mention the fact that the IRS is the strongest “super creditor” on earth—nothing stops them from collecting). Specially trained revenue officers aggressively pursue businesses and individuals with delinquent tax obligations. When an outstanding tax liability becomes severely overdue, all business assets become subject to seizure and summary liquidation to satisfy the delinquency. Depending upon the legal structure of a business, a business owner’s personal assets may even be subject to confiscation and liquidation to satisfy IRS tax liens! Are you scared yet? Are you committed to getting payroll taxes right?
Back Taxes Turn Off Business Lights
In extreme cases, tax collectors can completely close a business operation and liquidate inventory to satisfy outstanding tax obligations. Business principals such as partners, LLC members, and sole proprietors may also face criminal prosecution for fraud or tax evasion.
Tap Into Proactive Tax Prevention
Competent counsel from a qualified tax attorney can make the difference between long-term business viability and colossal commercial failure. Laws pertaining to payroll taxes change frequently and vary widely among jurisdictions and geographical locales. Staying abreast of all pertinent legislative and regulatory changes is absolutely necessary if you want to own and run a successful business.
Avoid Tons of Prospective Tax “Cures”
Why risk your economic security and the success of your business? Do not take a chance on receiving an unwelcomed surprise visit from tax auditors and revenue collectors. You should seriously consider hiring competent counsel before taking even a single step into treacherous territory that is the world of payroll taxation. That’s where we come in.
The Parents Estate Planning Law Firm, PC
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