Because there are 5.73 million employer firms in the US, the IRS cannot possibly track whether every organization has paid the right property taxes, on-time, so instead relies on organizations to do so on a voluntary basis. When their system flags an employer for not paying their payroll taxes on time, a process is initiated to collect the amount due that includes an array of punishments for non-compliance that range from painful to truly hellish. After all, payroll taxes accounts for approximately 70% of annual revenue collected by the IRS. Here’s what happens when you fail to pay your payroll taxes on time and how to avoid doing so.
“Penalties Are Used to Enhance Voluntary Compliance”
So sayeth the IRS in a manner that reminds us of the old adage, “The beatings will continue until morale improves.” As such, non-compliance starts with penalties. Unless you can show a reasonable cause for not paying the right amount on time (good luck with that), you will face the following penalties, which mount quickly:
- 2% for 1-5 days late
- 5% for 6-15 days late
- 10% more than 16 days late
- A maximum of 15%
Beyond the Penalties
Employers that ignore their payroll tax obligations will face civil enforcement efforts, including federal lawsuits to enjoin noncompliance, ensure future compliance and collect amounts due.
According to the Department of Justice, “…federal courts have entered permanent injunctions against delinquent employers across the country… the injunctions also preclude defendants from assigning property or making payments to other creditors until the employment tax obligations accruing after the date of the injunction are paid. [Already this year] injunctions have been entered against an LA pizza parlor, a Washington dentist, a Delaware doughnut shop, a South Carolina trucking company, and a Baltimore marble importer, just to name a few.
“When individuals and entities subject to these injunctions knowingly violate the terms of the injunction, the Tax Division stands ready to seek orders of civil or criminal contempt, including incarceration, to bring the defendants into compliance.”
Dante would be proud.
How to Ensure Your Payroll Taxes Are Paid on Time
The only way to ensure your payroll taxes are paid, on-time, so that you never have to endure the wrath of the IRS is to have someone with extensive payroll experience that you can trust manage their payment.
SBS Payroll has been in business for 20 years and many clients have been with us for 10-20 years. We ensure that you always know what needs to be paid, when to do so, and if something goes wrong.