Failure by an employer to pay taxes due or to withhold required amounts from an employee’s wages can result in substantial penalties to the employer. Refer to the current IRS Publication 15, Circular E, Employer’s Tax Guide and the current California Employer’s Tax Guide for detailed information regarding penalties.

Penalties may apply if the PTA:

  • Does not make required deposits on time;
  • Does not make deposits at an authorized financial institution; or
  • Pays with the return (amounts that may be paid with a return are limited).

Penalties may apply for each whole or part month if IRS Form 941, Employer’s Quarterly Federal Tax Return is not filed when required, disregarding any extensions of the filing due date.

The PTA may make advance Earned Income Credit (EIC) payments to employees that submit IRS Form W-5. If the PTA does not do this, it is subject to a penalty equal to the amount of the advance EIC payments not made.

A penalty may be imposed if the PTA fails to file (on paper or on electronic media) an Information Return (IRS Forms W-2 and 1099-MISC) or files with incorrect information. A PTA that fails to withhold or pay over any tax withheld is guilty of a misdemeanor and the responsible party or parties may be imprisoned and/or fined.

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