If your business has one or more employees, it also has requirements to file employment tax returns, and to pay employment taxes at the state and federal level. Depending upon the size of your business, and upon the number of employees, the business may be required to make tax deposits with each payroll. Failure to meet these obligations will negatively affect the business’ ability to continue to operate. Furthermore, anyone deemed responsible for filing the employment tax returns and for making payments to the state and federal governments, may also become personally responsible for some or all of the unpaid employment taxes.
Who would be considered a responsible person?
The MA Department of Revenue and the IRS have similar criteria for determining who is responsible for unpaid employment taxes. The facts and circumstances surrounding a person’s involvement with a business will be analyzed. The state and federal government should review a person’s title, job description, authority, and past actions before determining if he or she is responsible for filing the employment tax returns and paying the associated taxes of the business. You do NOT need to be an owner of a business to be found to be responsible for the unpaid employment taxes.
If the IRS or the Massachusetts Department of Revenue are investigating you as a possible responsible person, you should take this matter very seriously. You should have an opportunity to prove that you are not a responsible person for purposes of unpaid employment taxes. It is in your best interest to do so early in the process. Once the IRS or the Massachusetts Department of Revenue has determined that you are responsible for the unpaid employment taxes, it can then seek to collect the balances from you personally.
Even if you agree that you are responsible for the unpaid employment taxes of a business, the amount proposed against you individually may not be accurate.