If you have employees, you are responsible for paying them their wages. However you are also responsible for making your Federal Tax Deposits to the IRS in a timely manner. Failure to do so can result in unnecessary penalties. This Federal Tax Deposit includes the money withheld from the Employee based on their W-4, as well as the Social Security and Medicare portion that is also withheld from the Employee, and the Employer’s same Social Security and Medicare contribution.
More important than the timeliness of the deposit, is the making of the portion of the deposit that consists of the monies withheld from the Employee. This is called the “Trust Fund Portion” of payroll. The IRS is trusting you to take that money and deposit it as a trusted third party. Thus the IRS has special rules that can allow them to try and assess any “responsible person” for that amount of money if it is not deposited. “Responsible person” is a defined term, and the IRS presumes that any Corporate or Entity Officer, Manager, etc is a “responsible person”. In order to assess this, the IRS also has to assert that the responsible person is “willful”,which is also a defined term. Additionally, Corporate or LLC liability protection will not help prevent this assessment.
This is an area that is fraught with traps and pitfalls for the business owner, or their spouses and other associates involved in the business, and the best thing a business owner can do to avoid this area is to make timely deposits. The next best thing, is to contact the Law Offices of Marc J. Miles if they miss more than 2 deposits to discuss their options.