Past Due Payroll Taxes and Returns
The burden of keeping up with payroll taxes and filing returns timely can be highly demanding and stressful. It’s common for small businesses to get behind on payroll taxes and returns because of the extra workload it adds, but any business can fall victim in this arena. Unfortunately, once payroll tax returns are delinquent, the effects can be far-reaching. Many companies find that they struggle to catch up once they’ve fallen behind. When payroll tax returns are delinquent, multiple agencies must be answered to. The IRS, EDD, and Tax Board all get involved, individually imposing fines.
What You Need to Know About Past Due Payroll Tax Returns
First, it’s important to know when these tax returns are due. Businesses are required to file payroll tax returns on a quarterly basis on the last day of the month following the quarter. Many businesses find it helpful to look these dates up and post them for reference. If you fall behind on payroll tax returns and payroll tax deposits, you are at risk for falling behind in other quarters. Even if you miss one payment, you can expect penalties for two areas: nonpayment and noncompliance. These penalties truly add up quickly, and before you know it, you could be struggling to keep your cash flow up to accommodate your tax fines. The best practice is to stay on top of your payroll tax returns!
What are the Penalties for Delinquent Payroll Tax Returns?
As we mentioned before, if your payroll tax returns have fallen behind, then you will be likely answering to multiple agencies, including the IRS, EDD, and the Franchise Tax Board. The basic penalty for deposits that are up to 5 days late is 2%. If your deposit is 6-15 days late, then you can expect a 5% fine. If your deposit is 16 or more days late, then your fine skyrockets to 10%. On top of that, if the IRS gets involved, then you need to be prepared for a 15% penalty.
Not only do these fees add up quickly, as you can see, but they also compound until they are completely paid off. While payroll taxes might seem clear and simple, delinquent payroll tax returns can be devastating. The best strategy is to stay on top of payroll taxes. If you fall behind, however, it’s imperative that you get the advice of a specialist who can advise you in payroll taxes.
Should I Hire a Payroll Tax Professional?
Payroll taxes seem so simple. Why hire a professional to help? While the rules for payroll are clear in most cases, the actual act of preparing payroll tax returns on a quarterly basis is a lot of work. If you fall behind in your payroll tax returns, then the work is going to snowball – as will the amount you owe in fines and penalties. To eliminate the hard work associated with payroll taxes and the burdens that come when they are deposited late, we recommend partnering with a tax specialist to make sure you are protected from unnecessary debt in the area of payroll tax returns.