Payroll taxes are the federal income tax withholding, Social Security, and Medicare taxes an employer must withhold from wages and deposit with the IRS on a set schedule, along with the employer's matching share and federal unemployment tax.
Withheld amounts are trust fund taxes: the money belongs to the employees and the government, not the business. Unpaid trust fund taxes can be assessed personally against responsible individuals.
Why it matters: payroll tax debt is the fastest way for a business problem to become a personal one. See trust fund recovery penalty.
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