The importance of paying employment taxes

Business owners are required to withhold taxes from workers’ paychecks and pay the IRS. Failure to do so can mean serious penalties.

Business owners in Ohio and across the country are required to pay certain taxes to the Internal Revenue Service on behalf of their employees. According to IRS regulations, employers must withhold federal income tax, federal unemployment tax, Social Security and Medicare taxes from workers' paychecks, and then send these taxes to the IRS. Both employers and workers alike should understand how the employment tax process works, as business owners may face steep penalties if they should knowingly fail to carry out these responsibilities.

Worker classification

Before payroll taxes can be withheld from workers' checks, employers must classify each worker as either an independent contractor or an employee. Unlike employees, independent contractors that work for a business are required to withhold, report and pay their own taxes from their paychecks.

Employer responsibilities

Once each employee has been classified, the employer can configure the proper tax amount that should be deducted based on the worker's pay rate and the number of dependents they declare on their tax form. The employer then withholds that amount and keeps it in a trust until it is time to send the funds to the IRS.

Failure to pay

There are certain penalties imposed by the federal government when businesses fail to make tax payments according to protocol. According to Internal Revenue Code, these consequences include the following:

· Payment of double the original amount of employment taxes owed.

· Felony charges of willful failure to pay over or collect federal taxes.

· A fine of up to $10,000.

Criminal action may be pursued if it is found that the employee responsible for overseeing IRS tax payments willfully neglected to send the money to the government, and instead used the funds for personal matters.

Who is responsible?

In some cases, the person who is responsible for overseeing the payment of payroll taxes for the company is held liable for failure to pay rather than the business entity itself. This may be a current officer or director who is placed in charge of maintaining the funds and sending them to the IRS or it may be a former employee who did not complete this essential requirement in the past. The officer or director's supervisor may also be held liable if he or she continues to approved the wrongful acts performed by the negligent employee.

Following proper procedures

In order to ensure your company is in compliance with payroll tax payments, you may want to enlist the assistance of an attorney who has experience handling these types of situations. Failure to pay payroll taxes can come with steep penalties. However, a lawyer in Ohio can look at the facts of the case and make sure that your rights are upheld in court.