IRS Payroll Tax Debt Repercussions

The Internal Revenue Service and other tax agencies have numerous processes and procedures that affect a business continuity and financial stability. We all know too well the levy on bank accounts, accounts receivable, notes receivable, credit card receivables, and money due to a company from third party payment providers such as Medicare, Medic-Cal, Insurance companies and others depending on the industry your company is actively involved in.

Are you aware of other potential consequences against business owners, officers, employees for failure to pay payroll taxes? Most people do not.

Below is a listing of consequences you or others may have imposed on them by Internal Revenue Service which will affect your financial economic situation:

1) Internal Revenue Code 6672 Any person required to collect, truthfully account for, and pay over any tax imposed by this title who willfully fails to collect such tax, or truthfully account for and pay over such tax, or willfully attempts in any manner to evade or defeat any such tax or the payment thereof, shall, in addition to other penalties provided by law, be liable to a penalty equal to the total amount of the tax evaded, or not collected, or not accounted for and paid over. No penalty shall be imposed under section 6653 or part II of Sub chapter A of chapter 68 for any offense to which this section is applicable.

Basically, anyone who was responsible for making sure the payroll taxes were paid including but not limited to; Officers, owners, employees, payroll service providers etc., can be investigated and billed (assessed) this penalty for each quarter that the tax withholding of employees and their social security taxes including Medicare taxes were not paid.

In addition, once tax is assessed. Notice of Federal Tax Liens and levies can be issued against any and all assets owned by the taxpayers. All collection including refund offsets are included.

2) The Internal Revenue Service can also file an injunction in civil court to stop businesses and owners from operating a business that has payroll responsibilities.

I.R.C. § 7512(b) applies to withheld employment taxes, backup withholding, and certain withheld and collected excise taxes (i.e., local telephone service, toll telephone service, teletypewriter exchange service, and air transportation). It requires the creation of a separate bank account and deposit therein of such taxes. Deposits to the separate bank account are paid over the government when a return for the deposit period is due, instead of through the Federal Tax Deposit system, which is one reason that monthly or semi-monthly return requirements are ordinarily established at the same time that I.R.C.§ 7512 requirements are imposed.

Failure to comply with provisions of I.R.C. § 7512(b) subjects the taxpayer to criminal prosecution under I.R.C. § 7215.

3) Furthermore, to substantial taxes and penalties, Section 7202 of the tax code makes it a felony offense punishable by up to five years in prison for any person required to collect, account for, and pay over any tax to willfully fail to collect or truthfully account for and pay over such tax. Again, because businesses, with some exceptions, are required to file IRS Forms 941 each quarter with their quarterly tax deposits, a responsible person who willfully fails to do so could face four separate counts of violating Section 7202 per year of non-compliance.

You do not want to wind up in this predicament of finding your company or yourself in civil or criminal actions by the Internal Revenue Service for business payroll tax problems. Call Martha De la chaussee or Luz Orozco at 323-344-2294 or 310-650-4664 for immediate assistance.

Do not wait for the Internal Revenue Service to take collection actions. Once you start accumulating unpaid payroll taxes, you need to take action to resolve the problem.

See my professional profile on Facebook under Martha De la chaussee, Facebook Resolucion de Impuestos (Tax Resolution) or Linkedin.

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