Legal Question in Tax Law in Kansas

Re: If a company you work for fails to pay their taxes

Fortunately, you will be OK here. The IRS understands that you have no control over whether the employer pays the money that has been withheld from your wages. Accordingly, you will be given full credit for what was withheld from you, whether or not the IRS ever gets the money from the employer. The IRS has significant collection powers, but they will be directed to the nonpaying employer, not you. You paid your taxes -- they were taken by the employer and held in trust for the IRS. The employer then violated that trust, but that has absolutely nothing to do with you.

If you get your W-2 form, you can rely on it, even if the employer did not pay the money to the IRS. And if you don't get your W-2 you can use the "year to date" information on your last paystub. The IRS doesn't have a problem with you, and they will not do anything to make your life difficult. The employer, on the other hand, will be in hot water to say the least.

One of the actions that can be taken against the employer, and more particularly against the officers of the employer if it is a corporation, is the assertion of the "trust fund recovery penalty." If you want to read more about this, check out the article on this subject in the articles section of my website at www.bjhaynes.com. I hope this helps.