At The Tax Law Firm of Charles A. Ray, Jr., we specialize in employment tax assistance in Washington, DC, guiding employers through the complex landscape of payroll taxes. Employment taxes stem from the employer's payroll calculations, necessitating the withholding of Federal Income Taxes and Social Security and Medicare taxes from each employee's wages.
Employers are required to make federal tax deposits for these withheld amounts during each pay period. They should also file Form 941, the Employer's Quarterly Federal Tax Return. This form reports crucial data such as total wages, taxable Social Security wages, Federal Income Taxes withheld, and Social Security and Medicare taxes.
The IRS meticulously matches the amounts reported on an employee's Form W-2 to those on Form 941. Discrepancies in these amounts prompt the IRS to contact the employer. Additionally, employers must report and remit their portion of the Federal Insurance Contribution Act (FICA) taxes and Federal Unemployment Tax Act (FUTA) payments.
Paying employment taxes is critical; the funds withheld are held "in trust" for the United States. Failure to remit these taxes can lead to significant financial repercussions for both the employer and the government. The IRS relies on these payments to credit the withheld amounts against an employee's individual tax liabilities, which can affect potential refunds.
To prevent revenue loss, Congress enacted Section 6672 of the Internal Revenue Code, empowering the IRS to hold individuals accountable for the non-payment of trust fund taxes.
The provision allows the IRS to collect taxes from those responsible for withholding and remitting these amounts. If individuals—be they officers, owners, or employees—fail to do so willfully, they may face personal liability for 100% of the unpaid taxes, commonly referred to as the "100% penalty" or "6672 penalty."
The civil nature of the 100% penalty does not negate the possibility of criminal prosecution for repeat offenders. A significant portion of the IRS Collection Division focuses on delinquent quarterly payroll taxes and the non-filing of employment tax returns. Identifying responsible officers is key to the assessment of the 100% penalty.
At The Tax Law Firm of Charles A. Ray, Jr., we provide comprehensive legal services to ensure our clients are adequately represented in employment tax cases. Our experienced team understands that effective tax representation requires an actionable plan to address delinquent employer returns swiftly and establish internal systems for ongoing compliance.
Our approach involves devising a plan acceptable to the IRS for managing overdue taxes. We aim to minimize the personal liability of responsible officers while achieving compliance with all filing requirements. Our skilled federal tax attorney will help you navigate the complexities of tax examination and safeguard your business against potential liabilities.
Contact us whenever you need employment tax assistance. The Tax Law Firm of Charles A. Ray, Jr. is dedicated to providing dependable advice and representation tailored to your specific needs.
