When businesses face cash flow problems, they commonly make the mistake of not paying their employment tax obligations. Optimistic business owners perilously opt to fund new ventures or cover cash crunches with these funds rather than paying delinquent employment taxes.
Employment taxes withheld from their employees’ paychecks are immediately due upon distributing payroll and are impounded under a trust for the United States and the workers. This money is no longer your money, even though it may be sitting in your bank account and commingled with other business funds. We often meet with business owners who do not grasp the severity of this designation.
Unpaid employer taxes quickly snowball, with each payroll period compounding the liability, and exponentially increasing the employment tax debt. Adding to the already tight cash situation, the IRS assesses penalties for failing to make payroll tax deposits, failing to pay taxes and more.
Businesses often decide to not file their employment tax returns because filing them, when there is no money to pay, will only hasten the IRS to their door. This seems like a good idea at the time, but it is not. Filing tax returns and paying the taxes owing on them are separate duties and each, standing alone, is subject to IRS penalties. What seemed like a good idea very quickly becomes an unmanageable IRS problem. When it does, you need professional help.
Delinquent employment taxes are a top priority for the IRS. At Anderson & Jahde, we have seen a spike in IRS criminal prosecutions for unpaid employment taxes. When this happens, the IRS’s aim is to put the person responsible for the delinquencies in prison. IRS has the authority to assess and collect unpaid trust fund portions (withheld portions) against the responsible individuals, and then collect the taxes from their personal income and assets of the individual, leaving the business owner in financial ruin.
Employment tax issues require experienced professional help. Anderson & Jahde lawyers have extensive experience in all facets of employment tax disputes and have taught the employment tax classes at the University of Denver, College of Law, Graduate Tax Program, for decades. Anderson & Jahde also handled the largest criminal employment tax case in the history of Colorado. Anderson & Jahde is the right call, right now.