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Withholding Taxes from Employees

Posted Feb 06, 2018

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Employers who withhold taxes from employee paychecks but fail to turn them over to the IRS may face a severe penalty. The Trust Fund Recovery Penalty is equal to 100% of the unpaid tax and can be assessed personally against responsible parties. In one case, a plastic surgeon said he’d acted in good faith, but was denied a new trial when the 5th Circuit Court of Appeals found he’d willfully evaded tax payment. Facts showed he’d paid employees with cashier’s checks and used available funds to pay personal expenses instead of paying taxes owed. (121 AFTR 2d 2018-319)





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