This is the absolute top of the food chain of priority cases for IRS Collection employees.
It is easy, all too easy, for an under-funded or struggling business to let payment of withholding taxes slide so it can pay other bills. This is a bad choice! IRS has to give employees credit for money withheld even if they never collect it then has to issue refund checks too. This is considered stealing from your employees and gets IRS very upset!
Succumbing to the temptation to use IRS as your involuntary banker is rewarded at best with steep penalties--not deductible, thank you--and interest charges that together make credit cards look like a bargain. Prosecution is possible for severe offenders as this official Department of Justice News Release shows. In the criminal justice system, failing to turn over withholding taxes is considered just the same as embezzlement.
A business's unpaid employment taxes will quickly become so overwhelming that it is impossible to recover. Bankruptcy will not help you. Operating as a corporation doesn't shield the owners from liability for withholding taxes. The inevitable filing of a federal tax lien will follow you for the next decade. Payment Agreements on these liabilities can be arranged if you can liquidate your delinquency over a reasonable period of time and pay current taxes. Offers in Compromise can be sometimes negotiated once you demonstrate you are paying current taxes timely. If payroll taxes are your problem you need to tell other creditors to wait and start paying current taxes immediately and contact me.
Michael S Cash Tax Resolution & Assistance 426 14th St, Suite 111, Modesto, CA 95354 (209) 484-5789