As an employer, you must pay employment taxes if you have employees. Fail to pay and the IRS will rain all over your parade.
Penalties
If you have employees, you absolutely must deduct and withhold various taxes from the paychecks of your employees. Since you are deducting money from the employee's paycheck, you are handling their funds. This fact is very important to the IRS and it places great emphasis on any failure to deposit employment taxes.
If you fail to pay employment taxes, you will be subject to a 100 percent penalty. Yes, 100 percent. Known as the "trust fund recovery penalty", the penalty is assessed against the person responsible for paying the taxes, not the entity. The person can be the owner, corporate officer or other "responsible person." In short, a business entity is not going to protect you from the wrath of the IRS.
Late Payments
Cash flow crunches are an inevitable event for practically every business. So, what happens if you make a late payment for employment taxes. Unless you can show a reasonable reason for the delay, the IRS is going to penalize you.
Late payment penalties range in amount depending on the delay. If the delay is less than six days, the penalty is two percent. Delay for six to 15 days and you are looking at five percent. More than 15 days in delay is going to push the penalty to 15 percent. If you delay this long, the IRS will be peppering you with penalty notices telling you where you stand.
In Closing
Whatever you do, make sure you deposit employment taxes with the IRS in a timely fashion. Take a moment to think about the worst thing you have ever heard done by the IRS. If you fail to pay employment taxes, the actions taken by the IRS will be ten times worse and you will be the one telling horror stories.
Richard Chapo is with http://www.businesstaxrecovery.com - recovering overpaid taxes for small businesses. Visit our article page - http://www.businesstaxrecovery.com/articles - to read more tax articles.
|
|
|
|
|
|
|
|
|
|
|


While accountants are reaching for aspirin, millions of Americans are... Read More
The 100 year old investment-banking firm of... Read More
OverviewIn the Pre-Budget Report of December 2003 the Chancellor Gordon... Read More
Just image, you are a small manufacturing company, business has... Read More
As a small business owner, it's wise to familiarize yourself... Read More
The powers of Congress, and the limitations set upon those... Read More
In a past article I relayed the plight of the... Read More
Deducting Your Auto ExpensesAuto deductions are a very complex topic.... Read More
Whether helping the kids with a down payment on their... Read More
Q: I was contacted by the city tax collector to... Read More
Why a Corporation Helps Save You TaxesThe Tax Rates (Notice... Read More
Anyone who is closely related to an accountant knows that... Read More
Employers often ask employees to designate the amount of tax... Read More
If you have employees, you are responsible for paying a... Read More
1812The first attempt to impose an income tax on America... Read More
The U.S. Department of Agriculture estimates that it costs nearly... Read More
Knock-Knock-KnockWho's there?The IRS!The next quarterly payment of estimated income tax... Read More
Self-assessment relies on taxpayers voluntarily meeting their tax obligations. This... Read More
"Settle for Pennies on the Dollar! IRS debts settled for... Read More
Do you realize that some tax forms ask you to... Read More
The Sarbanes-Oxley Act, also called the Public Company Accounting Reform... Read More
So, you were pleasantly surprised to learn that you are... Read More
As a small business owner or self-employed person, one of... Read More
If your like many, you don't always understand what people... Read More
One of the most important, but least understood or appreciated... Read More
Most people look forward to getting their tax return, but... Read More
Each year, the IRS lists various scams taxpayers get caught... Read More
The IRS has obtained civil injunctions against more than 100... Read More
In the rush to get tax returns prepared and filed... Read More
Statistics for IndividualsUnfortunately, the IRS increased its rate of auditing... Read More
As everyone in the U.S. knows, we have just passed... Read More
With the massive losses caused by Katrina, the economy of... Read More
Yes, the tax season is upon with the first filing... Read More


Own residential rental properties? This article discusses how income from... Read More
"Settle for Pennies on the Dollar! IRS debts settled for... Read More
Does your incorporated business pay alternative minimum tax ["AMT]? If... Read More
Import duties continue to be significant elements in the cost... Read More
Why a Corporation Helps Save You TaxesThe Tax Rates (Notice... Read More
April 15 - The most dreaded day of the year... Read More
Are you in the middle of a disagreement with the... Read More
Excerpted from the new book, "How to Do Space Age... Read More
On June 3, 2005, the IRS released guidance on charitable... Read More
If your identity is stolen, your finances can quickly become... Read More
With gas prices at an all time high before Hurricane... Read More
The United States is a nation of entrepreneurs. There are... Read More
Running a home based business reaps many wonderful tax deductions... Read More
The knock on the door from a Tax Inspector is... Read More
"Depreciation." For business owners, this word is the one most... Read More
Many Americans believe that an IRS debt is a debt... Read More
When buying a business, how the "purchase price" is made... Read More
The Internal Revenue Service has certified the 2006 Toyota Highlander... Read More
All states also have their own tax system. Typically there... Read More
Millions of people file tax return extensions every year. The... Read More
While accountants are reaching for aspirin, millions of Americans are... Read More
As tax time approaches, many home-based business owners begin completing... Read More
While there are many equally valid reasons to incorporate, saving... Read More
Anyone who is closely related to an accountant knows that... Read More
Let's assume that you would like to begin saving for... Read More
If you are a Small Business Owner or Self-Employed Person,... Read More
Whether helping the kids with a down payment on their... Read More
Have you been thinking about incorporating your small business or... Read More
A Federal Tax Lien (FTL) is a legal instrument that... Read More
Many small businesses complain when confronted with the expense of... Read More
Background issues of access to recordsTo assess the records at... Read More
To tax or not to tax - this question could... Read More
NOTE: This is the first in a series of 5... Read More
Tax |