Usually when you work with a payroll company, the last thing you expect is for them to not send your tax payments into the IRS. Unfortunately, in a recent court case, when a payroll company declared bankruptcy, that is exactly what happened.
In this particular case, when the payroll company went under it held client funds that were supposed to be paid to the IRS. Some clients received IRS notices that they still owed money while others never received those notices because they went straight to the payroll company. The bankrupt payroll company told some clients it was an IRS error. Regardless, the clients’ money was gone- and they still owed the taxes.
To reduce the risk of something like this happening to you, follow these steps:
- Hire reputable payroll companies. I work with http://www.zenpayroll.com.
- Don’t allow the payroll company to sign your tax returns. Confirm that the payroll company deposited your tax payments and filed your returns.
- Don’t let IRS correspondence be sent to the payroll company.
- Request tax account transcripts from the IRS on a regular basis.
Payroll taxes is one area the IRS is not sympathetic or forgiving about. Companies are always responsible for their taxes and the tax courts agree.