Tempted to Borrow from Payroll Taxes? Some Maine-based small business may be going through some hard times. Borrowing from payroll taxes that have been withheld from employee paychecks might seem like an easy way to get cash temporarily. Business owners might think they’ll just borrow enough to pay urgent expenses and pay it right back later.

That can, however, be a serious, costly misstep. The IRS won’t want to hear about a business’ bad circumstances if the money isn’t there when it’s due. In reality, not having that money makes a small business owner a thief in the eyes of the IRS. That money belongs to a company’s employees and is meant to stay in a trust fund to pay income taxes, Social Security and Medicare.

Remember that with the Trust Fund Recovery Penalty, the government can fine a business owner personally for 100 percent of the amount due, plus interest. The government will pursue collection of unpaid trust fund taxes from officers, directors and stockholders of the business, but may also go after other people who are considered responsible parties.

To avoid that disastrous situation, call Filler & Associates to talk to our professionals. We can help ensure business owners know all applicable tax laws, and investigate sources of financing when cash is tight.