The penalties for NOT paying payroll taxes can be steep and complicated. These penalties can be for Form 941 taxes (withholding and FICA taxes) but may also apply to other similar forms. Even if you choose to hire a payroll processor or firm to handle your taxes, YOU, as the employer are responsible for your liabilities and paying your payroll taxes.
It is the employer’s responsibility to see that tax returns are filed on a timely basis and that all taxes are paid correctly and on time.
Some of the reasons you may receive penalties:
- Failure to deposit
- Trust Fund Recovery Penalty
- Failure to file penalty
- Late deposits
Deposits are applied to the most recent liability. If you owe a monthly deposit and you do not make your February deposit but do make a deposit in March, this payment will be applied to March and you will incur further penalties for February. The penalties add up quickly so it is important to be correct, on time and efficient in filing and paying your taxes.
For more details on penalties, see IRS Publication 15: Employer’s Tax Guide.