construction; government contractor and technology; not-for-profit; real estate; emerging growth companies
tax; business advisory
Abstract:
Every employer is responsible for withholding the appropriate amount of income taxes, social security taxes (Federal Insurance Contribution Act, or “FICA” taxes) and Medicare taxes from each of its employees’ paychecks.
These withholdings, along with the employer’s share of FICA taxes, are then remitted to the IRS. Until the withholdings are remitted to the IRS, they are considered to be held by the employer in trust for the benefit of the employees. But what happens when an employer fails to remit its employees’ withholding taxes to the IRS?
What happens when an employer fails to remit its employees’ withholding taxes to the IRS?
Many years ago, Congress enacted a law that if an employer fails to remit the withheld taxes to the IRS and is unable to pay these taxes over time, the IRS can collect those taxes personally from one or more persons with power over the employer’s finances by assessing a Trust Fund Recovery Penalty (TFRP). But who is responsible for this penalty? And what does it include? To learn more, download the full article.