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The only reason compliance with the tax code is as high as it is is because the money disappears before the employee ever sees it.</p>
<p>If you left it up to every individual to pay their taxes on their own, it would just multiply the business problem a thousand-fold.</p>
<p>“I don’t know but maybe it makes sense to shut down the companies that simply refuse to pay and are basically stealing the money that’s not theirs to begin with.”
exactly. </p>
<p>It is basic business A B C that you choose to be in a particular business [for instance, retail sales in a state that charges sales tax] , it means you have to collect taxes as past of being in business. Duh. If you try to keep said taxes, you should be forced out of business. Period.</p>
<p>notrich enough you are correct in that assumption.</p>
<p>Tom, in addition to perception, there is a reasonable expectation that the government will apply the rules passed by the people with equity and probity. The taxes should be just, justified, but also enforced to all. In my book, there are no excuses for companies or individuals to obfuscate taxes collected on behalf of their clients or employees. However, it also seems unreasonable to continue with policies that rely on collecting from the ones who cannot get away. </p>
<p>The perception, justified or not, is that the collection of taxes is not an equitable proposal. As you could expect, to a good Texan, state taxes are not especially endearing. and especially not to someone who earns his living on the West Coast. Of course, money has to come from somewhere, and the problem is that we did run of the most “logical” somewhere a long time ago. All the discussions seem to be about low income taxes although ancillary taxes (including property taxes) are taking much larger bites.</p>
<p>At the risk of veering into a political direction through a comment, it is obvious that we need a simpler mechanism to raise the public funding and one that is not so determined to cripple the locomotives of our society by constantly loading additional wagons to the their "maximum acceptable capacity.’ </p>
<p>As far as businesses escaping the remittances of sales taxes (and others) it is amazing that a technology that would direct the tax portion of sales to the taxing authorities has not been implemented.* As far as payroll taxes, a case could be made to drop the corporate withholding and make the taxpayers pay their taxes and SS contributions on a quarterly basis. I could be wrong but I believe most individual taxpayers would be fearful to engage in tax evasion considering the potential risks. </p>
<p>Of course, a simple system might not generate the penalties expected from a complicated system. The government might be smarter than “we” think after all.</p>
<p>*Technology could involve the use of smart terminals in businesses that have been “caught.” Instead of closing the operations, the owners could agree to install special terminals that withhold a portion of the sales. The choice would be to be shut down or agree to use the terminals exclusively.</p>
<p>menloparkmom- you would be shocked that your opinion is not universally accepted on that.
I think we should work with businesses that fall behind but I also firmly believe we need to have a very strict condition on what they must do going forward. I will tell you though if we enforced my rule there will be such a significant number of businesses being closed by the government in every State that there would be a backlash. Now they could not argue on the merit of the action but the facts would become distorted in attempts to make the government look over zealous.</p>
<p>xiggi- I agree with you completely that the collection of taxes must be equally enforced with the same terms and conditions faced by all. There should be rules and procedures and they should be transparent so everyone knows what they are and how we go about enforcing them. I am just not sure that the public is ready.</p>
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<p>I think that each case is unique and you’d have to look at their books
and assess their business prospects and the businesses’ ability to pay.
Perhaps you could give them some latitude provided that they open their
books to you once or twice a month.</p>
<p>In some cases, I think that businesses should be shut down. Are you
going to hire an army of finance and accounting people to manage this
though?</p>
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<p>Depends on the competitive landscape. But acquisitions usually result
in layoffs if there is overlap.</p>
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<p>I think that people would pay their taxes if they deemed them fair.
But that’s a discussion for another day.</p>
<p>You could simply deposit the check in the employees bank (let’s assume
that all employees have bank accounts) and tag it as a payroll check
and let the banks take the withholding. That takes one step out of the
withholding process.</p>
<p>BC- I think this is what I am asking-I think that each case is unique and you’d have to look at their books and assess their business prospects and the businesses’ ability to pay.
Perhaps you could give them some latitude provided that they open their books to you once or twice a month.</p>
<p>Do people think we should do that? I like this rule- we will work with you as long as you do not fall further behind. If you can not at least pay your current taxes you have the option to file for bankruptcy and let the bankruptcy court rule how you have to pay back the debt. The bankruptcy stops all our civil collection action.
If you do not pay your current taxes and do not seek protection in bankruptcy then you would be subject to seizure of you business. We would take action in order of the amount of the trust fund debt. The business that owes the most would be seized first and so on down the line.</p>
<p>I will tell you though if we enforced my rule there will be such a significant number of businesses being closed by the government in every State that there would be a backlash.</p>
<p>Well, thats an assumption that may or may not be correct. Why you think the “public” would support keeping in business, a businesses that kept what did not belong to them? Why do you think Joe Public would think its an outrage to close a business that knowingly broke the law, and thought they could get away with it? I dont see too much public sympathy for companies who have gotten caught with their hands in the cookie jar.
And yes companies hire people, but I find it far fetched that you think “the public” would be outraged that a company that chose to steal, actually gets punished. Thousands of companies [ both big and small] go out of business each year, for lots of reasons. The restaurant business has about a 50% annual failure rate. Where’s the outrage for all of those defunct business?</p>
<p>menloparkmom- over 30 years of experience. Daily contact with State legislators from both parties, the reaction from customers about the evil government closing the business they frequent. Basically real life experience doing the work. Do you remember the congressional hearings on the IRS held many years ago.</p>
<p>menloparkmom- here is an article about the IRS hearing. I am sure many people remember it what they do not know is that the testimony was found later on to be false. Because of privacy laws the IRS or any other tax agency can not respond in public to charges made against them. </p>
<p>Some Tax Agency Horror Stories Proven False on Further Investigation</p>
<p>At the Federal level I believe whoever is in charge of payroll can be held personally liable if withheld taxes aren’t paid, and their personal assets seized and/or they can go to jail. And you can’t bankrupt your way out of back Federal taxes, don’t know about at the state level.</p>
<p>More than once I’ve gone to a business only to find the doors chained and padlocked, and a sign saying the business had been seized for back taxes. I didn’t feel bad for the business owner.</p>
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Why should this be the banks’ responsibility? Withholding is complicated, that’s why most businesses, even very small ones, out-source their payroll.</p>
<p>Having the general public be responsible for their own withholding would just push tremendous chunks of the economy into a cash-only, black-market type of situation.</p>
<p>notrichenough- the officers can be personally liable for the trust taxes due- sales and/or withholding taxes. In fact even non-officers can be held liable depending on the scoop of their duties.
The problem is that most of the time the officers have no assets.</p>
<p>In NJ we must follow the requirements set in the Cooperstein case.</p>
<p>tom–
Are you talking about employers not remitting to the government:</p>
<p>-Sales tax that customers have paid, with the purpose of going to the gov’t
-Payroll tax that employees have had withheld to pay their income tax or SS to the gov’t
-The employer’s match that goes to fund the other half of SS tax
-Corporate income tax from the business</p>
<p>Are some employers not paying all of the above, or is it usually one particular type?</p>
<p>Skyhook- I am talking about both sales tax and the income tax that is withheld from employee on the State level. On the federal level it would be the employee portion of the ss plus the federal income tax withheld. The employer matching part is not a trust fund tax nor is the corporate income tax from business. While there is a problem with collection of all of those I am specifically talking about the trust taxes that are collected from someone else by a business and held in “trust” for the government.</p>
<p>The problem on the State level is greater with the failure to pay the sales tax but on the federal level it is the combination of the social security contribution plus the income tax withholding.</p>
<p>The answer is yes many employers and businesses are keeping that money.</p>
<p>To give everyone an idea about how big a problem this is I would say it is about $1 billion a year in NJ alone. That assumes that 90% of the sales tax is submitted and 99% of the withholding tax. I think those %'s are generously high. So the problem may be significantly higher.</p>
<p>$1 billion pays for either nice tax reductions or funding worthwhile programs.</p>
<p>I’ve been dealing with this for over 25 years. In my experience, companies that have the funds remit the taxes. If they are not remitting taxes, it is because of cash flow problems and they are using the trust-fund taxes to finance daily operations.</p>
<p>If we left remitting taxes up to the average wage earner, whoa…can’t even begin to describe this nightmare…no, people would not be “scared of the gov’t” enough to pay them.</p>
<p>srystress- yes it is all about cash flow problems the majority of the time. So in your experience how should the government handle the issue? Is there an absolute condition the government should place on these businesses before agreeing to any plan to attempt to repay the debt? What do you think the backlash would be if say an absolute condition was that all current taxes had to be paid from that date forward to allow any type of repayment schedule. If the business failed to pay the current taxes in order not to increase the debt they were shut down by the State? The end result say was the State ended up closing 100-120 businesses a month.
I believe you are a tax professional so you see this issue from the opposite side than I do.</p>
<p>How about getting rid of your income tax?</p>
<p>On banks processing withholdings - businesses already have to send their withholdings to banks. Processing? It’s just software.</p>
<p>People manage to pay their cell phone bills, food bills, gasoline bills, etc. They could pay their withholdings too - yes it might require some responsibility but perhaps we should give people a chance to be responsible instead of assuming that they won’t be.</p>
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Actually, that would be “getting away with stealing other people’s money that they have been entrusted with forwarding to the government.”</p>
<p>Look, I know there’s a lot of political gloss that can be put on this, but the basic facts are straightforward: it isn’t the businesses’ money. Never was. It’s money that businesses’ collected from others - their customers and employees - under a responsibility to send it on to the government. But the businesses stole the money instead. Plain and simple. This is a legitimate “What part of illegal don’t you understand?” issue. The fact that folks like sewhappy express encouragement and admiration for this particular form of theft says a lot about why it goes on.</p>