At Tax Relief Advisers, we understand. It’s easy to fall behind on payroll taxes and use the funds for other purposes. As hard as it is, staying up-to-date on payroll tax reporting and payments is essential. The consequences are not worth the risk. The Internal Revenue Service has systems in place to help you get back on track and we have experienced staff members to help you navigate their regulations. Can I go to jail for not paying payroll tax? Let’s take a look.

At Tax Relief Advisers we specialize in payroll tax issues and helping you create a plan to get back on track with your payroll taxes. We wrote a blog about what payroll taxes are as well, as a resource to you. But let’s go over it again quickly here. 

What Are Payroll Taxes?

The payroll tax has two components: contributions withheld from your employee’s wages, and matching taxes paid by you (also known as the trust fund portion). 

It’s calculated based on wages, salaries, and tips paid to the employee. 

What Happens if I Don’t Pay Payroll Taxes?

If you are behind on your taxes, expect to receive letters from the IRS. If you do not respond, then an IRS Revenue Officer will visit your place of business or home. Collection of the payroll tax is extremely aggressive — if the IRS doesn’t collect from your business then you will be responsible personally. 

It may not just be you. Revenue officers will determine any responsible party and may visit with anyone whom they deem could have, or should have, and make sure payroll taxes were paid. For example, a responsible party could be anyone with a bank account signature care (active or not), a secretary or bookkeeper, business partners, directors, stakeholders, or managers. 

Who Are Revenue Officers?

Revenue officers are employed by the IRS. Their job is to collect what you owe as quickly as possible. They can be reasonable or they can be challenging. If you choose to deal with them on your own, you are, essentially, representing yourself during an investigation. If you do not have experience with IRS revenue officers, we do not recommend doing this. Your best chance at lessening your penalty and creating a working plan for the future is to hire a professional to help you.

Beware of IRS scams as well. A real IRS revenue officer will never try to collect payments over the phone. Scams are another reason you should work with a professional. For more information about IRS scams, please visit the IRS website.

What are the Repercussions?

If an IRS revenue officer visits you, that simply means you’re behind on tax payments and the IRS is seeking information. Many things can happen after that, but at this juncture, you need to be careful. This is not a time to pretend you are a negotiator or hide. 

Civil Penalties

A civil penalty is a non-criminal financial penalty imposed by a government agency as restitution for wrongdoing. This means you will typically pay a fine on top of what you owe.

The IRS can seize the funds from your business. They can seize your business’s bank account(s), accounts receivables, inventory, and business assets to cover what you owe.

Tax Relief Advisers is well-equipped to handle this process to help you take control of your finances again. We work with the IRS revenue officer so you can continue with what you do, run your business. We work with you to come up with a plan to resolve tax problems. 

Criminal Penalties

It is a crime to not pay payroll tax to the IRS and divert the money to other sources. This is usually reserved for the most egregious cases, but it is the IRS code and can be enforced. It can result in jail time, incarceration, probation, legal fees, revocation of certain licenses, loss of certain rights, loss of citizenship and more.

Under IRS Tax Code, a willful failure to pay or collect tax is a felony punishable by up to a $10,000 fine or five years in prison, or both. Take our advice and hire a professional. 

Remember, the IRS targets any responsible party, so the person at fault may not just be the business owner. These charges can apply to any involved corporate officers, partnership members, employees, and others responsible for collecting and paying or withholding taxes. 

Real-Life Example of Tax Evasion

In January 2013, a Maryland business owner named Alphonso Tillman was sentenced to 2 years in prison, with 3 years of supervised release, after he failed to pay employment taxes. He was also ordered to pay restitution of $2,205,991. The $2.2 million was withheld from his employee’s taxes and used for Tillman’s personal gain. 

Get Payroll Tax Professionals on Your Side

Dealing with IRS revenue officers on your own is rarely a good idea. To avoid dealing with the above enforcement action, trust Tax Relief Advisers to help. We will save you time, money, and frustration

We offer boutique-style services, serve all 50 states, and will set up payment plans. Give us a call today for a free consultation to get your life back from the IRS. 

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