Withheld Taxes are Held in Trust
tax planning, tax strategies, income tax planning, income tax reduction, tax reduction strategies, lower your taxes, lower taxes, tax planning, income tax preparation, tax preparation
The payroll taxes an employer holds back from an employee (the “Trust Fund”) never belongs to the employer, but rather it is held in a constructive trust for the benefit of the employee until they are deposited with the government. Thus, every employer is a Trustee whose beneficiaries are their employees.
As a Trustee, the employer has a fiduciary duty to properly report and turn over all withheld taxes. If the employer fails to meet this obligation, it is considered to be a breach of fiduciary duty, and Congress has established harsh penalties to punish the responsible persons who willfully fail to collect or pay the withheld taxes.
