Employers: How to Avoid Penalties for Not Paying Payroll Taxes

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As a busy employer, you are responsible for the day to day success of your business. From sales to marketing, and from fulfillment of goods and services to back-office operations, you have a lot on your plate. The truth is, no one can do the job perfectly, but there are things you can do to improve your business performance. Take taxes as an example.

Payroll Tax Penalties

Mark Rowley, Owner
RandR Payroll Services

The IRS is the collector of payroll taxes. Currently, about $72 billion dollars is uncollected by the IRS due to underreporting or unpaid payroll taxes. That is a problem for the government and a very strong reason why they penalize employers who do not pay on time. In fact, by not following tax laws, you may be exposed to both civil and criminal penalties.

Penalties vary, depending on how much you owe the government and how overdue the payment is. The IRS penalties can be quite steep, ranging from 2% for 1-5 days late, to 10% for 16+ days late. It can even go as high as 15% for 10+ days lateness after the first bill from the IRS is sent out! On top of this, you also have to pay interest at a rate of 3%-6%, depending on how much you owe. And if your report is late? Well, that is an additional fine as well.

Penalties for not paying or filing your payroll taxes on time are no joke. So, what can you do to avoid them? Here are a few things to help you to better manage your tax responsibilities on time:

  • Calculate, withhold, contribute, and save payroll taxes
  • Do NOT borrow from payroll tax funds you have set aside
  • Stay informed of updated IRS payroll tax deposit schedules
  • Automate your business payroll processing

If you’re unsure how to make these things happen, it may be helpful to get the support of a professional. Adding a good accounting and payroll team to your support system can go a long way in helping you stay ahead of payroll taxes. R&R Payroll & Bookkeeping Services can help. Call us at (951) 296-0412.