The IRS is vigilant about collecting taxes in full and on time. They waste no time imposing penalties and interest on individuals. That\u2019s not to say businesses are less vulnerable. Instead, one of the risks of unpaid payroll taxes is that the IRS specifically targets these businesses for collection. That\u2019s because unpaid payroll taxes account for almost $60 billion in lost revenue.<\/p>\n\n\n\n
In fact, the U.S. Justice Department<\/a> sees unpaid payroll taxes as a substantial problem<\/a>. It shares a snapshot of how they impact overall revenue for the IRS.<\/p>\n\n\n\n \u201cAmounts withheld from employee wages represent nearly 70% of all revenue collected by the IRS and, as of June 30, 2016, more than $59.4 billion of tax reported on Employer\u2019s Quarterly Federal Tax Returns (Forms 941) remained unpaid.\u201d<\/p>\n\n\n\n Business aren\u2019t the only entities exposed to the risks of unpaid payroll taxes<\/a>. The IRS can hold individuals who are a part of the business liable for them, as well.<\/p>\n\n\n\n The IRS tries to collect unpaid payroll taxes from the business first. \u201cThey assess monetary penalties against the business,\u201d says Forbes<\/a>. In addition, they explain, \u201cThey issue tax lien<\/a> notices against the business and record them in the local Register of Deeds\u2019 office. They may attempt to levy (seize) the business\u2019s bank accounts.\u201d<\/p>\n\n\n\n However, their efforts aren\u2019t always successful. If their collection efforts don\u2019t work, the IRS turns to the individuals in charge of handling the business\u2019s money. But first they have to decide who is liable for the monies by law. So, they initiate an investigation to learn more about the business\u2019s common financial practices.<\/p>\n\n\n\n Business owners aren\u2019t the only people with exposure to the penalties for unpaid payroll taxes. Anyone with the duties to handle money coming into or going out of the business are responsible. In fact, the IRS has the legal right to even hold employees of third-party payroll companies liable.<\/p>\n\n\n\n During the investigation, the IRS reviews bank documents and business records. This is chiefly how they determine who should be targets for the trust fund recovery penalty (TFRP).<\/p>\n\n\nRisks of Unpaid Payroll Taxes for Individuals<\/h2>\n\n\n\n
Determining Who is Liable for Unpaid Payroll Taxes<\/h2>\n\n\n\n