I've Heard That Payroll Taxes are "Trust Fund Taxes." What Does That Mean?

As an employer, you pay your employees, but you withhold part of their pay for things like their share of Social Security and Medicare taxes, and, of course, their income taxes. Although this money may be parked in your business' bank account until you pay it to the U.S. Treasury or the Wisconsin Department of Revenue, it does not legally belong to you or your business. You are holding it in trust for your employees and you have a fiduciary obligation to pay it to the government. If you do not do so, you and your business can be held liable and can be subject to severe penalties, including imprisonment. In collecting "trust fund taxes", the government is allowed to "pierce the corporate veil" and go after you personally, even though your business is a limited liability company or corporation.

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