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Collection of Employment Taxes – Info for Employers (Part III)

Collection of Employment Taxes – Info for Employers (Part III):

 

What are trust fund taxes?

 

Trust fund taxes are the income tax, Social Security tax, and Medicare tax (trust fund taxes) withheld from the employee’s wages. They are called trust fund taxes because the employer holds these funds “in trust” for the government until it submits them in a federal tax deposit.

 

Certain excise taxes are also considered trust fund taxes because they are collected and held in trust for the government until submitted in a federal tax deposit. For more information, see Publication 510, Excise Taxes.

 

To encourage prompt payment of withheld employment taxes and collected excise taxes, Congress has passed a law that provides for the Trust Fund Recovery Penalty.

For more information on employment taxes or trust fund taxes, see Publication 15, Circular E, Employer’s Tax Guide.

 

Next week:  Information on the Trust Fund Recovery Penalty

 

(IRS Publication 594 and IRS.gov) (TTT 11/05/19)