Employers have a key responsibility when it comes to payroll tax. They need to withhold these taxes when paying the employee and pay these taxes on their behalf. Furthermore, all payroll taxes need to be reported by the employer. Failing to report, collect and remit, whether intentionally or unintentionally, will result in a penalty for unpaid payroll taxes.
The different payroll taxes that an employer needs to take note of include: –
When there are unpaid payroll taxes, there are different penalties the employer will face which may include: –
The penalty for not paying employee taxes as mentioned above is just the beginning. If the bill remains unpaid, then the penalty begins to earn interest adding up to 6% on the amount that is owed. When sharing the bill, it will be indicated the time when pay is expected. After this time, a tax lien may be filed, so that the IRS can settled their claim against their property. In the worst-case scenario, one may be charged and receive jail time.
Since the payroll taxes are held on behalf of the employees, they are also known as trust fund taxes. The largest payroll late payment penalties are what the employer will face if they fail to withhold federal employment taxes. This can be viewed as a felony, and the result may be 100% penalty of the taxes that are owed. In the toughest cases, the penalty will be imprisonment of up to five years. The reason that this penalty is so severe is because it is viewed as willful failure to pay the tax.
To ensure that the business does not need to face these penalties, the human resource department should ensure the following: –
It is essential for employers to have an individual or a team within the company responsible for keeping track of the taxes. There are penalties imposed for filing the wrong information or making mistakes when filing. With taxes, it is essential to get it right the first time.
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