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Payroll Taxes & IRS Trust Fund Recovery Penalties

Posted by Kamyar Mehdiyoun, Esq. | Oct 01, 2023

Payroll Taxes are deductions made from an employee's paycheck by the employer. These funds are then supposed to be sent to the IRS. They include federal income taxes, Social Security taxes, and Medicare taxes. As a business owner, it is your legal obligation to remit these collected taxes to the IRS in a timely manner.

Why You Can't Ignore Payroll Taxes

If you think you can use these funds for other operational costs, think again. The IRS has stringent regulations, and ignoring these can result in the Trust Fund Recovery Penalty. This penalty can extend to not just the owners, but also employees deemed responsible for financial decisions.

Consequences of Unpaid Payroll Taxes

Failure to timely remit payroll taxes to the IRS lead to punitive financial consequences including the Trust Fund Recovery Penalty which can be assessed on certain individuals in the business.

Personal Liability and the Trust Fund Recovery Penalty

Personal liability through the Trust Fund Recovery Penalty is not a hypothetical threat. It is a very real risk that can have devastating effects on your financial stability and future business endeavors. The IRS can initiate this penalty against anyone who is deemed responsible for the unpaid taxes. Such individuals may also be exposed to criminal penalties if the IRS concludes failure to remit the tax was intentional. 

If issues regarding Payroll Taxes and IRS Trust Fund Recovery Penalties are looming over your financial future, time is of the essence. Kamyar Mehdiyoun, is a Georgetown-trained tax attorney with over 20 years of experience in trust fund penalty matters. Schedule a free consultation here.  

About the Author

Kamyar Mehdiyoun, Esq.

Kamyar Mehdiyoun, holds a Master of Law (LL.M.) degree in taxation from Georgetown University Law Center and focuses his practice on tax law. In 2003, he received the Award for Excellence in Tax Practice and Procedure from Georgetown. He also holds a Certificate in Employee Be...

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