Is This Your Situation – Tempted to Borrow from Payroll Taxes?
January 14, 2014 by Gordon Advisors
When times are tough, the payroll taxes you’ve been withholding from employee paychecks might seem like an easy source of temporary cash. Some business owners think they’ll just borrow some money to pay urgent expenses and put it back later.
But that is often a serious, costly mistake. If the money isn’t there when it’s due, there won’t be any sympathy from the IRS. In fact, in the eyes of the tax collector, you’re a thief. That money belongs to your employees and is meant to stay in a trust fund to pay income taxes, Social Security and Medicare.source of temporary cash. Some business owners think they’ll just borrow some money to pay urgent expenses and put it back later.
Potential IRS response: With the “Trust Fund Recovery Penalty,” the government can fine you personally for 100 percent of the amount due, plus interest. The IRS frequently pursues collection of unpaid trust fund taxes from officers, directors and stockholders of the business, but can also go after other people who are considered “responsible” parties who acted “willfully.”
To avoid that disastrous situation, call us to talk to our professionals. We can help ensure you stay on the right side of the tax laws and investigate sources of financing when cash is tight. |