Question

If a business operates without paying taxes, what possible irs business tax penalties does it face?

Answer

A business that failed to file and paid no taxes by its return’s due date is subject to:

  • Penalties
  • Late-filing penalty
  • Late-payment penalty
  • Interest

These will apply until the business owner pays the balance of the business taxes. If the IRS determines that fraud is involved, a business owner will be subject to:

  • Non-payment penalties and additional fines
  • Sanctions
  • Possible criminal prosecution with jail time

Also, if a business has employees and doesn’t pay payroll taxes, it might be subject to the trust fund recovery payment. This is a 100% penalty that can be assessed against any person in the employer’s business who:

  • Is responsible for collecting, accounting for, and paying withheld employment taxes
  • Willfully fails to collect or pay these taxes

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