I was recently at an ICPAS Chapter meeting where an IRS Special Agent (the ones who carry guns) was discussing the increase in payroll withholding cases.
There has been a 33% increase in investigations into payroll tax issues. This is where employers do not pay payroll taxes timely or consistently. These cases we were told have an average jail time of 2 years being assessed.
We recently published a case where an owner had money stolen from a bookkeeper so he loaned the company money. Instead of paying the complete payroll tax liability, the owner paid employees and is now in trouble.
Paying any bill other than the payroll tax liability is an issue for the IRS and will increase penalties and interest. The IRS considers paying other creditor with available funds and not making the timely payroll taxes is an indication of what they term as willfulness. There is no defense against willfulness.
So make sure that you remain current on your payroll taxes. If you have issues or questions contact our office for assistance. An installment agreement may be an option.