What Happens If You Fail to Remit Payroll Taxes?
If you are running a sole proprietorship or small and medium enterprises, or any large firm, you must have to pay taxes not only on your company’s earned profit but also on the employees’ payroll. Whether you are doing marketing or investment, related with financing activity or asset management you earn profit. Or if payroll service is doing a job on the behalf of your company it must pay the taxes.
Payroll outsourcing is the best way to complete your task to provide salaries regarding workers. Now what? If you fail to pay not only your firms’ tax but also the money you have taken from employees’ payroll as tax, there should be a legal way to charge you penalties and this way is mentioned below in details. Read on to get more information.
Tax is the amount charged on a personal income or firm’s profit by the government. Whereas payroll tax means the amount withheld from the workers payroll by the employer to pay taxes. So employer should pay the taxes regarding his employees’ payroll. Sometimes many employers do not pay taxes and they feel happiness to save that money.
Owners are liable to withhold the money from employees to pay tax as the state and federal income tax. Taxes are varying from person to person. If the organization is large its tax rate is high and vice versa. When employer is withholding the money of his workers, he becomes trustee of the U.S. government. These taxes are considered as a fund which the government is liable to spend on the welfare of its people.
If you are hiring payroll service it is very good. Because now you are free to take any tension regarding taxes. Payroll outsourcing is the easiest way not only pays salaries to the employees but also calculates the taxes and manages the payroll details
When payroll taxes are not paid:
Everyone who earns money is liable to pay taxes to the government. If employer fails to pay taxes, Internal Revenue Service (ISR) will definitely impose high penalties.
The US government has made Internal Revenue Service. This organization looks after the taxes regarding payroll and company’s profit.
When you or anybody commits the crime of tax aversion, ISR will charge you not only penalty but also interest. The employer is liable if anybody under his organization fails to pay payroll tax. If payroll outsourcing is being done, he will also be liable.
Internal Revenue Court (IRC) in section 6672 gives authority to The Trust Fund Recovery Penalty (TFRP) to collect and help taxes and revenues. Penalty is differing according to the payroll tax. The trust fund recovery penalty imposed 2% to 4% of the payroll tax as penalty.