RELIABLE SCOTTSDALE TAX EMPLOYMENT ATTORNEYS READY TO ASSIST YOU
Running a business is more than a full-time job, in many ways, it is also a way of life. Business owners, as well as those in charge of paying a business’s payroll taxes, take on an incredible amount of responsibility. Given the many burdens on a business owner’s shoulders, occasionally a well-meaning business owner can run afoul of their state and federal employment tax obligations.
At the Arizona tax law firm of Kaczmarek & Jojola, we represent business owners in all types of employment tax and payroll tax matters. With extensive experience helping both large and small businesses successfully deal with their tax matters, we are an invaluable resource to businesses with outstanding employment tax issues.
An Arizona Business’s Employment Tax Obligations
Employment taxes or payroll taxes are those taxes that employers and employees must pay based on the wages, tips, and salaries paid to employees throughout the year. Employees pay some of these taxes through payroll deductions managed by the employer. Employers must accurately withhold, deposit, and report all employee-withheld payroll taxes. Employers must also pay their share of employment taxes directly to the IRS. If an employer fails to follow the strict protocol set forth by the IRS related to payroll taxes, then an employer may face strict penalties. In some cases, the person responsible for paying employment taxes can even face personal liability for their failure to do so.
When it comes to employment taxes, there are four main types:
- Federal income tax: Most employers must withhold federal income tax from an employee’s pay. The exact amount withheld is determined by reviewing the employee’s W-4 as well as the associated withholding tables.
- FICA tax: The Federal Insurance Contributions Act (FICA) tax funds the Social Security and Medicare programs. Both employers and employees are responsible for paying FICA tax. For example, as of 2020, FICA tax consists of a 6.2 percent Social Security tax and a 1.45 percent Medicare tax, for a total of 7.65 percent. Thus, an employer must withhold 7.65 percent of an employee’s wages. The employer is also responsible for a matching 7.65 percent contribution.
- FUTA tax: The Federal Unemployment Tax Act (FUTA) provides unemployment benefits to workers who lost their jobs. Employers are solely responsible for paying FUTA tax and cannot withhold any amount of FUTA tax from an employee’s pay.
- SUI tax: State Unemployment Insurance (SUI) tax is the state counterpart of FUTA tax, and helps provide benefits to unemployed workers. SUI tax rates vary by state. For example, Arizona assigns all new businesses a two percent SUI tax rate for two years. After the two-year period is up, the tax rate may increase or decrease, depending on the amount of taxes the business paid, the amount of unemployment benefits paid to former employees, and the average size of the business’s annual taxable payroll.
In addition to paying its own share of payroll taxes, an employer must also withhold the appropriate amount of tax from employees’ pay and deposit this money with the IRS. In certain cases, an individual’s failure to make the necessary deposits with the IRS can result in their individual liability through the Trust Fund Recovery Penalty.
The Trust Fund Recovery Penalty (TFRP) is an IRS penalty issued when a person who is responsible for collecting and paying employment taxes willfully fails to do so. To assess a TFRP, the IRS must be able to prove that the individual was both the “responsible person” for withholding and paying the payroll taxes as well as that they “willfully” failed to collect and pay those taxes.
Why Choose Kaczmarek & Jojola?
Dealing with an outstanding tax issue adds to a business owner’s already busy schedule. Not only that, but it can also be a tremendously stressful experience, especially when the IRS threatens a federal tax lien on business assets or pursues personal liability through a Trust Fund Recovery Penalty. At Kaczmarek & Jojola, attorneys Derek Kaczmarek and David Jojola provide skillful, knowledgeable, and effective representation to businesses of all sizes. Attorneys Kaczmarek and Jojola both spent years working as IRS attorneys, where they handled thousands of cases. These experiences provide Kaczmarek & Jojola with an unrivaled knowledge of payroll tax law, setting the firm apart from other Arizona employment tax law firms.
SPEAK WITH A DEDICATED SCOTTSDALE TAX EMPLOYMENT LAWYER TODAY
If your business has unresolved payroll tax issues, we can help provide peace of mind by confidently assessing the situation and helping you come up with an effective and manageable solution. In the event a case must proceed to trial, as veteran trial attorneys specializing in tax law, we can aggressively defend you or your business from whatever IRS collection efforts you are facing. Contact Kaczmarek & Jojola to schedule a consultation by calling or completing our online form.