If employers fail to deposit employment taxes with the IRS on time, they may be subject to the following penalties, depending on the number of days payment is past due:

• One to five days late results in a 2% penalty
• Six to 15 days late results in a 5% penalty
• 16 days late or within 10 days of the first IRS notice results in a 10% penalty
• 10 days after the first IRS notice results in a maximum penalty of 15%

What happens if you cannot pay payroll taxes?

Businesses that are unable to pay their employment taxes usually receive a notice from the IRS and a monetary penalty. If the taxes remain unpaid and the failure is determined to be willful, the IRS can place a lien on the employer’s assets or file criminal charges.

Who is liable for unpaid payroll taxes?

Anyone who is tasked with collecting and paying withheld employment taxes, such as an accountant or executive leader, may be held responsible for infractions. What’s more, the IRS does not limit its investigations to a single person and will prosecute everyone who it can prove played a role in the tax violation.

Will the IRS negotiate payroll taxes?

Under certain circumstances, employers who are unable to pay their employment taxes can settle their tax debt with the IRS for less than the full amount owed. To apply, they must submit Form 656, Offer in Compromise and all supporting documents that prove their eligibility. The IRS generally weighs their decision on the applicant’s income, expenses, asset income and ability to pay.

Is not paying payroll taxes a crime?

If the IRS determines that an employer willfully neglected to pay employment taxes, the individual could face civil and criminal sanctions, including imprisonment for up to five years.