IRS is cracking down on payroll violators

We want to keep you informed of the latest changes that are taking place in the always changing tax world. YOU NEED TO BE ABREAST OF WHAT THE IRS IS CONCENTRATING THEIR ATTENTION UPON TO AVOID FUTURE PROBLEMS.

At a seminar I attended recently, a former high-level IRS agent was the guest speaker and his discussion centered on HOT TOPICS at the IRS. They are shifting agents from other areas into employment tax compliance. Due to the severity of this topic we felt that it is important to share this information with our clients, referral sources and friends of the firm:

IRS IS CRACKING DOWN ON PAYROLL VIOLATORS
Some violations carry civil and Criminal Penalties

DO YOU FALL INTO ONE OF THE CATEGORIES BELOW?

1. You are the owner of an ‘S’ Corporation – or a ‘C’ Corporation and do not write yourself a pay check?
2. Do you not file your payroll taxes timely?
3. Do not pay your payroll taxes on time or at all?
4. Do you treat your employees as subcontractors?

If you are the owner of a Corporation you are required by the IRS to pay yourself a reasonable salary. What is considered reasonable? A reasonable salary would be what you would pay someone to do your job, or what you would expect to be paid doing the same job for someone else.

What does this mean to you? If you are currently not filing or paying your payroll taxes you will be in serious trouble with the IRS and could be facing possible jail-time in addition to penalties and interest charges. What can happen? The IRS will assess penalties and interest. The interest and penalties will vary depending on how late the return is and how often you are late in filing your returns. The maximum penalty (not interest) for this is 25%. There are also additional penalties and interest for not making your payroll deposits on time, the maximum penalty (not interest) for this is 25%. This may also be considered a criminal offense if you have not deposited ‘trust fund’ monies on a timely basis (employee withholding and their share of payroll taxes).