With so many individuals and businesses being affected by COVID-19, some are wondering what relief efforts are being made in regards to taxes and the approaching filing deadline. Thankfully, some guidance has been given in the form of the The Families First Coronavirus Response Act.

A major incentive to forming a corporation or LLC is that it will shield the individual owners and members from being personally liable for debts that the corporation or LLC incurs. Though this is correct in most cases, especially in the case of a lawsuit against the corporation or LLC, when it comes to a payroll tax debt, being held personally responsible is a real possibility. In this blog we will discuss the personal assessment of a payroll tax debt by the Employment Development Department (EDD), how it differs from the IRS process, and some important information to potentially protect yourself.

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Forming a Limited Liability Company (LLC) for your business can personally protect you against debts that your business incurs, including debts arising from unpaid payroll taxes. But, what if you’re a single-member LLC that did not make an election for how the business would be taxed? Do you still have the same personal protection from payroll tax debts?

Going through the assessment process of Trust Fund Recovery Penalties (TFRPs) is complicated. It can become even more complicated when the IRS Revenue Officer has deemed you a responsible person because the chance of you having the TFRPs assessed to you personally drastically increases. It’s important to remember taxpayers have rights, including the right to appeal the assessment of the TFRPs. In this blog, we will discuss the different appeals rights that a taxpayer has, when it is applicable, and the timing involved with each.

When it is determined that a business has misclassified an employee, several taxing authorities may end up being involved. This will most likely result in some stiff penalties and the payment of taxes for the periods when the employee was improperly classified. In this blog, we will go over the taxing authorities you will most likely encounter and the penalties and taxes you may be facing. But first, let’s quickly discuss what misclassifying an employee means.

For any employer it’s important to have a good understanding of payroll taxes. After all, it’s your responsibility to make sure the payroll taxes eventually get paid to the IRS (and your state). What many people don’t realize is that the employees also have a responsibility to pay payroll taxes. Most people don’t realize this because these taxes are withheld from their paycheck by their employer and the employer takes care of making sure they get paid. In this blog we will cover the general payroll obligations of employers and employees.

Payroll taxes are something that any business owner should be familiar with if they have employees to whom they pay an hourly wage or salary. Having a good understanding of what payroll taxes consist of and how to properly withhold and pay the payroll taxes will help you in avoiding tax issues, not only for your business but for any person responsible for making sure they are paid. Should a payroll tax issue arise, the responsible person(s) could end up being personally assessed what are know as trust fund recovery penalties (“TFRPs”).