Employment Tax Law Archives

Impact of COVID-19 on federal payroll taxes

Payroll taxes make up about 2/3 of the IRS' annual revenue. With the COVID-19 pandemic sweeping the globe and unemployment at an all-time high, the IRS is expecting a significant decline in this revenue, meaning after the panic has ended, they will need to replenish this deficit. So how will the IRS likely go about recouping this loss? They are likely to aggressively pursue employers looking for back payroll taxes that may be owed.

Failing to stay on top of payroll taxes can get your company into hot water

Understanding payroll tax withholding is crucial for business, not only to ensure the employees are making appropriate contributions, but also to prevent problems with the IRS. As an employer, your company's payroll tax withholding is a legal obligation and it is your responsibility to ensure the withheld taxable portions are paid in a timely manner. The amount of taxes to be withheld will be based on your employee's W4 forms submitted to the federal, state and, in some places, city taxing authorities.

With Q2 almost over, make sure your payroll taxes are current

If you are a business owner, you are likely aware of the peaks and valleys in revenue that are inherent during the operation of the business. Because of these fluctuations, it is often tempting to delay paying bills and other obligations during times when revenue is down in order to keep your business afloat or pay other creditors. However, as the Justice Department reminded taxpayers earlier this year, one of the areas that you should never neglect to timely pay are quarterly payroll taxes.

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