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Payroll Taxes From the Employer and the Employee’s Perspective

Payroll Taxes From the Employer and the Employee’s Perspective

Employer’s Payroll Tax Responsibility

An employer is responsible for reporting income and employment taxes.  Employers are also responsible for withholding these taxes and paying them to the IRS on behalf of their employees.   Income and taxes withheld are reported to the IRS on a quarterly basis unless you are self-employed.  Employers who intentionally do not comply are subject to criminal and civil sanctions.  We frequently have clients who have underpaid their payroll taxes for various reasons.  Those reasons can vary from accounting errors to payroll service errors to all-out theft on the part of the payroll service. 

Tax Crimes and Payroll Services

In a previous case of tax crime involving a payroll company in Pennsylvania, the company defrauded both the taxpayers and the IRS by never actually depositing any of the withholding.  In addition, both the employer and the employee were still responsible for their tax debt including interest and penalties.

Not Paying Payroll Taxes as an Employer

Not paying payroll taxes as an employer is serious.  Even if a payroll service is responsible for an underpayment or other error and you have no knowledge of the error any person who has ownership or responsibility can be assessed a 100% penalty (all taxes not collected).  

Escalating Tax

A business gets can be shut down by the IRS after a payroll tax insufficiency.  A business should work with an Enrolled Agent to rectify the situation as quickly as possible.  This is done in order to avoid escalating tax debt.

Now for the Employee’s Side

Your employer is responsible for collecting and remitting your withheld taxes to the IRS unless you are self-employed.  If you are concerned that your employer is improperly handling your withholding you should report your employer to the IRS by calling 1-800-829-1040.  In cases where your employer failed to deposit your withheld taxes or failed to issue W-2, you can complete a Form 4852 using your pay stubs.  

If your Employer Refuses

You are still responsible for your portion of the payroll taxes your employer should have deducted.  Your employer is supposed to match certain tax deductions and pay them in.  If your employer refuses to collect the taxes from your check and make the necessary deposits, you will still need to pay your portion.  You can do this by making weekly, monthly, or quarterly estimated tax payments.


If you are an employer or employee and have questions or problems with your taxes work directly with Enrolled Agents with more than 29 years in business and the experience that counts by calling 561-293-3135.  Tax Professionals w an A+ rated service that has never had a single complaint in more than 30 years.  A consultation cost you nothing and coul save you thousands.