What are the Penalties for Failing to Pay Payroll Taxes?

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Payroll processing involves more work than just cutting a check for each employee. As an employer, you have requirements to withhold payroll taxes and make payments on a regular basis. But, what happens if you fail to make these payments?

Mark Rowley, OwnerRandR Payroll Services

Mark Rowley, Owner
RandR Payroll Services

Why Payroll Tax Payments are Missed

It is possible for business owners to withhold the taxes, keep the money in a separate account, and then forget to send the payment. There are many distractions in the office, making it easy to overlook the simple tasks.

Another scenario is if you are short on cash flow. If payroll taxes aren’t due quite yet, then it might be tempting to dip into that fund to keep the business running. Even if you had good intentions to return the money to your payroll tax savings account, things happen and you might not have the cash available when the due date rolls around.

Skipping a Payroll Tax Payment

You might be able to pay a credit card bill a little late, but payroll tax costs are different. Failing to pay this money on time will result in problems with the IRS. If a payment has been skipped, then it is essential that you deposit the taxes right away. Otherwise, the IRS will contact you by sending a notice to request payment.

Late payments result in penalties, increasing the amount that you have to pay. So, it is best to make the payments on time whenever possible. These penalties are steep, ranging from 2 – 15% in fees after receiving the IRS notice.

To make matters worse, you could also be facing criminal penalties that could include prison. The fines can be as high as $10,000 and up to five years in prison if you are found guilty of failing to comply with the federal employment tax laws!

Don’t Miss Your Tax Payments

The best solution to ensure that your tax payments are sent on time is by hiring a professional payroll company to help with these payments. These services include everything that you need, such as payroll processing, calculating withholdings, completing tax forms, and sending the payments as needed.

Are you interested in learning more? Call us at R&R Payroll & Bookkeeping Services to see how we can help: (951) 296-0412.