Protect yourself from the 100% penalty on payroll taxes

Ten Forty + Quality Tax Preparation & Financial Services 281-397-7777 Fax 281-397-7443 Payroll Tax Tip Protect yourself from the 100% penalty on payroll taxes As an employer, you're responsible for collecting payroll taxes from employee wages and depositing the taxes with the IRS. The IRS takes these rules very seriously – so seriously that if your business willfully fails to deposit payroll taxes on time, the responsible person could be held personally liable for a penalty of 100% of the past due amount. In other words, if your company comes up short on payroll deposits, you might have to pay the entire balance out of your own pocket. Who is a "responsible person" for purposes of the penalty? You can be considered a responsible person when you're the active owner of the business. The definition can also be extended to others with authority over disbursing funds, such as the treasurer or other officer of the company, a bookkeeper, and even an independent third party. For example, in one court case, a corporate vice president had an agreement with the president of the company that stated the vice president wouldn't exercise control over funds, although he had check writing authority if the president was out of the office. Nevertheless, the vice president was found to be a responsible person. What is a "willful failure?" Typically, the penalty will apply if you knew or should have known about the unpaid payroll tax liability. What can you do to protect yourself? Make complying with payroll rules a top priority. Stay aware of due dates by setting up a "tickler" or reminder file, or notifications on an electronic calendar. Follow up to ensure that deposits have been made on time. Assign the task of payroll collection and deposits to a reliable employee and train backup staff to fill in during vacations or other absences. You can't be too careful with your payroll tax obligations. Contact us for assistance and guidance whenever you have questions. Don’t hesitate to call us if you have any questions. Tax season is here. Go to www.tenfortyplus.com and complete your online organizer (under forms and documents). Make your appointment using our online appointment system. Call 281-397-7777 and get a user id with password set up so you Regards, Joseph C Becker EA www.tenfortyplus.com 281-397-7777, Fax 281-397-7443 joeb@tenfortyplus.com Contact Us There are many events that occur during the year that can affect your tax situation. Preparation of your tax return involves summarizing transactions and events that occurred during the prior year. In most situations, treatment is firmly established at the time the transaction occurs. However, negative tax effects can be avoided by proper planning. Please contact us in advance if you have questions about the tax effects of a transaction or event, including the following: • Pension or IRA distributions. • Retirement. • Significant change in income or • Notice from IRS or other deductions. Revenue department. • Job change. • Divorce or separation. • Marriage. • Self-employment. • Attainment of age 59½ or 70½. • Charitable contributions • Sale/purchase of a business property in excess of $5,000 • Sale or purchase of a residence or other real estate.