Boy oh boy, as a company, you do this to the IRS, they will come down on you like a ton of bricks and chain your doors shut with very little warning. It’s not like erring or underpaying your Fed income taxes...you’ll get several polite warnings. But they go apoplectic on failure to remit withholding taxes. It should be said that “withholding taxes” on the IRS side include SS tax (FICA) and UI, as well as income tax. On the state side, it’s just income tax. (maybe it’s the state that collects UI, it’s been a while since I did a payroll)
They wouldn’t be doing this if there wasn’t some sort of “permission”...hard as it may be to believe. Anyone in biz knows you do not mess with withholding taxes. You’ll unhinge the IRS big time.
Paychex does this all the time. They deduct the money out of their clients’ payroll weekly, or bi-weekly, and keep it until it is due — quarterly. Then they turn it over to the proper authorities. In the mean time they use it and make mmoney off of the interest.