LYCOS RETRIEVER 
Federal Payroll Tax: Funds
built 262 days ago
Because the law regarding payroll tax noncompliance is so sweeping, small business owners should pay particular attention to the trust fund taxes. It is vital to keep the taxes that are covered by the TFRP current, even when the business is experiencing cash flow problems. If it appears as if the small business is heading for bankruptcy, these taxes should be paid prior to filing, when management can still designate where the IRS should apply payments. After the company files for bankruptcy it loses this option, and the IRS will apply any payments elsewhere since they can collect the TFRP from individuals associated with the company. "Obviously, if a company is experiencing cash flow problems, accountants and other responsible persons are tempted to pay creditors who cry loudest and whose nonpayment will have an immediate negative impact, such as vendors who will stop shipping necessary supplies," Knight and Knight noted. "Not paying the IRS may solve short-term cash flow problems—but at the long-term personal expense of the responsible person who makes that decision."
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All revenue generated from the HI payroll tax is deposited in the Hospital Insurance Trust Fund. Revenues in that trust fund are used to finance inpatient hospital, skilled nursing facility, home health, and other institutional services.
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You keep your payroll tax funds until your tax payments are actually due. Unlike other payroll services that impound funds at the time that you run your payroll, MyEZPayroll lets you hold on to your money.
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