When it comes to payroll, and payroll taxes, business owners have a lot of questions:
- Who’s actually responsible for payroll taxes being paid?
- I have a payroll provider, but how do I know taxes are being paid on my behalf – in full and on time?
- If the taxes don’t get paid, who does the IRS come looking for?
- Is there any legal recourse if the taxes haven’t been paid? Is the government lenient in these situations?
Ultimately, employers are responsible for the payment of payroll taxes. The business owner may hire a payroll service, but if there’s a problem, the government will always look to the employer.
Owner of The Payroll Department, Teresa Ray says, “If you are hiring that responsibility out to a payroll processing company then they need to provide some kind of proof to the employer that the payroll taxes are being paid. We have our books audited every quarter and an outside service will send a letter to every client letting them know that their taxes are paid and they’re ready to go into the next quarter.”
If a payroll provider is supposed to be submitting payroll taxes for you and they don’t, you do have the option of taking legal action, but in the interim, the government will require that you pay the taxes in order to stop penalties and interest from accruing. The government wants the taxes paid in full and on time, and they let you take care of how that gets done – and handle any issues that come up. In other words, there is no leniency or special consideration given.
The IRS says: Evasion of Employment Taxes Carries a Price. Evasion of employment taxes can have serious consequences for both employers and employees.
- Employers may be subject to criminal charges and civil sanctions as well as additional penalties and interest.
- Employees may lose eligibility for benefits such as social security, Medicare or other employment benefits. If taxes are not paid in, the employee will not be able to receive income tax refunds or benefits because the deposits were not made on their behalf.
Employment taxes are one of the reasons why so many businesses engage a payroll service and with good reason. Taxes are never a matter to take lightly. The Payroll Department stays on top of taxes and law changes so small business owners can rest assured and spend their time staying on top of their business.
-Elaine of The Payroll Department Blog Team