When your company fails to pay all of the payroll taxes it owes, you have no personal liability for those taxes, right? Unfortunately, that’s not always true. The party responsible for paying your company’s payroll taxes (for most small businesses, that’s you, the owner) can be held liable for not paying payroll tax.
That’s because payroll taxes are considered “trust fund taxes.” Essentially, that means the money does not belong to you: it is the employee’s wages, and you are merely holding the tax portion “in trust” before turning it over to the relevant tax authorities. So when you don’t submit the full amount of payroll taxes owed to the IRS, it could be considered a federal crime.
The biggest problems happen when the responsible party is:
- Aware of the unpaid payroll taxes
- “Willfully” did not pay them to the IRS
So, for example, company owners who “borrow” from their employees’ payroll taxes to pay other expenses can soon find themselves in hot water. That is the type of situation where a small business owner is likely to find themselves personally liable and subject to the Trust Fund Recovery Penalty (TFRP).
If you’re struggling with a payroll tax problem or you’ve received notice that the IRS is assessing the TFRP against you, you’ll want to contact Pro Tax Resolution right away. Our tax resolution team has more than 40 years of experience handling even complex IRS and back tax issues, and we can help you resolve your unpaid payroll taxes in the most effective manner. These types of problems can get worse quickly, so don’t hesitate to contact our professionals now!