Failing to file or pay payroll taxes on time can lead to severe consequences, including financial penalties and legal action.
The IRS can assess penalties for late filing (up to 25% of the unpaid amount), late payment (0.5% per month), and failure to deposit employment taxes (up to 15% depending on how late the payment is).
In serious cases, the IRS may pursue criminal charges or assign a Trust Fund Recovery Penalty (TFRP) to responsible individuals within the company. State tax agencies may also issue their own penalties and enforcement actions.
To avoid these issues, it’s crucial to use a reliable payroll service that ensures timely and accurate tax payments. Regularly reviewing your payroll reports and bank statements can also help catch and resolve issues early.
