Payroll Taxes

One of the most frequent and harmful IRS tax violations is the failure of an employer to send payroll taxes to the IRS that it has withheld from its employees pay.

The payroll taxes an employer holds back from an employee ("trust fund") never belongs to the employer, but rather are held in a constructive trust for the federal government; Thus, every employer has a fiduciary duty to properly report and turn over all withheld taxes. If you don't do it, it is considered to be theft of government funds. Even though it is very unlikely the IRS would pursue criminal charges for this, they do have the ability to do so.

As a non-responsible employee, you are still an employee and still liable for your portion of the payroll tax. This means 50 percent of the total payroll tax liability or 7.65 percent of your gross wages, as of 2013. If the employer shows withheld payroll taxes on your W-2, then he is responsible for reimbursing the IRS if any of those funds are missing. Social Security, in the meantime, uses the W-2 to document money paid on your behalf into the Social Security trust fund. If the payroll taxes don't show up on the W-2, then you're not getting credit for those payments and may be losing eligibility for Social Security disability or retirement benefits.

If you suspect your employer is not adhering to these guidelines, you should contact a tax attorney at Wolf Tax that will help you remedy the situation as quick as possible.