You don’t know what you don’t know, until you know…
Did you know, under the U.S. tax code (IRS section 6672), the IRS can assess you personally for 100% of your organization’s unpaid payroll taxes if you’re deemed a “responsible person” who willfully fails to deposit those taxes. You can be considered a responsible person if you simply have some - even limited - check-signing authority or sign 941s. You don’t have to be an owner, corporate officer, or the company’s only responsible person. All it takes to “willfully” fail to deposit payroll taxes is to pay the company’s other creditors before paying the IRS. The IRS is BIG on priorities!

I submit to you the case of the volun-told clerk.
In 2010 a woman in Pennsylvania was the HR supervisor of a family-owned business which was operated by her two brothers. The brothers requested her to become the unpaid treasurer of the business and she obliged as a favor to them. She was in this sort of volun-told position from February 2010 – November 2010. During this time, she endorsed several checks to the company’s creditors and signed one Form 941 in June 2010. The business fell into financial trouble and never deposited $24,000 in payroll taxes for the June 2010 period. Four years later, in 2014, the IRS held the woman personally responsible for 100% of the unpaid taxes. She appealed and tried to have the tax bill reduced, claiming it was uncollectible. The IRS rejected her offer and filed a notice of levy against her assets. She sued, but the Tax Court said she had to pay up. (Eichler v. Commissioner) This case went back and forth from 2014 to 2018. She hired an attorney, paid all of those fees, and still lost.

Bottom line.
The IRS wants their money and they will come and get it. Payroll taxes are “government trust fund money” and are not taken lightly at all. Failing to deposit trust fund money can result in jail time. Section 6672 is real. Almost no one is able to escape the penalties once the IRS has its sights set on you. If you find yourself in a similar situation, you should document the steps you take to ensure that the company’s payroll taxes are deposited on time. If the company is non-compliant, document conversations and protests you submit to the owners or officers. If they remain noncompliant, it’s probably time to think about resigning and maybe even blowing the whistle so you do not end up in hot water years down the road. 

Stay on the right track and don’t get burned, download a free copy of our checklist 5 Keys for Managing the One-Person Payroll Office 2019, a simple guide to shoring up your payroll duties for each pay period, month and calendar quarter. Access the checklist at https://helpdesksuites.com/5-keys-to-managing-the-one-person-payroll-office/