Originally Posted by kevinmason7
Can Anybody Please tell me What are the Penalties for Late Payroll Taxes?
Among your responsibilities as an ER is the requirement to collect,report, and pay payroll taxes as required by federal and state laws. If you are a corporate officer or other "responsible party," as defined by the IRS, you may be personally liable for payroll taxes not reported or deposited as required. Penalties for late payroll taxes are computed by multiplying the amount of the late payment by a percentage that is set by the number of days late. Generally, penalties and fees cannot be waived. In fact, if a company goes bankrupt, the IRS may try to recover unpaid taxes from the individuals who should have withheld them. Penalties are complicated; For more details on penalties, see IRS Publication 15: Employer's Tax Guide. These penalties are for Form 941 taxes (withholding and FICA taxes) but may also apply to other similar forms.
•Failure to deposit For Form 941 and similar forms: 2% 1-5 days late, 5% 6-15 days late, 10% more than 16 days late or within 10 days of first notice from the IRS, maximum 15%.
•Trust Fund Recovery Penalty, for failure to pay payroll taxes when due. The Trust Fund Recovery Penalty is a penalty imposed on businesses who collect money, account for that money, and pay that money to taxing entities. Sales taxes are a TFRP tax, as are payroll taxes imposed on responsible party. The IRS says, "If income, social security, or Medicare taxes that must be withheld are not withheld or are not paid, you [as a responsible party] may be personally liable for the trust fund recovery penalty." Remember, the TFRP is 100% of the unpaid tax (income, social security, and Medicare). In addition to penalties, interest accrues from the due date.
•Failure to file penalty For Form 941, 5% of the unpaid tax due with the return, for each whole or part month a return is not filed when required. You as a responsible party for your company can be held personally liable for willful failure to withhold employee pay and payroll taxes or to pay withheld income taxes and other payroll taxes to federal and state agencies.
NOTE: Even if you can prove your failure to pay or report taxes wasn't "willful," and you avoid having to pay the Trust Fund Recovery Penalty, you can still face fines for late payments.You also may be penalized for unpaid payroll taxes if you misclassified workers as independent contractors instead of as EEs. Failure to prepare W-2 forms for EEs and provide them by the deadline (the end of January, for the previous year), may subject you to a $50 penalty for each statement that should have been sent or which was incorrectly prepared.