For Texas businesses, one of the most serious financial problems that can be faced is employment tax issues. When a business fails to pay any or all of the required withholding taxes related to employee paychecks, the Internal Revenue Service may take very strong action. Understanding employment tax requirements and staying compliant is the best way to avoid facing the power of the IRS, but there are things a business can do if it becomes embroiled in such issues.
Withholding taxes represent the money withheld from an employee’s check as well as the matching portion to be paid by the business. If a business doesn’t make these payments appropriately, it’s almost like it is stealing from employees as well as avoiding taxes. In most cases, employment taxes are deposited into a tax account on a scheduled basis, ranging from biweekly to quarterly deposits.
Missing deposits throughout the year ends up creating a tax shortfall when W-2s and other tax forms are processed at the end of the year. The IRS reconciles these forms with the deposits made by businesses to ensure tax payments were deposited in a timely fashion, and penalties and interests are back dated to when taxes should have been applied.
Employee tax issues and disputes have brought down businesses because taxes owed, along with penalties, interest and fines, can easily climb into the hundreds of thousands of dollars. Not every tax bill is correct, though, and the IRS can make mistakes just like anyone else. When facing large business tax issues, understanding your options and seeking outside assistance with negotiations or disputes can increase your chances at a more desired outcome.