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.
See #3.
Right, I get that. But if the company never actually sends out the state taxes, and just keeps them, as the article states, was it ever actually state taxes? It seems, well dirty, that they tax their workers state tax then keep it. It seems at least for transparency purposes that they should send in the state taxes and if they have an incentive plan with the state then get that money back as the state cuts a check. It just seems when it is done the way it is currently done like the employee is being charged some sort of an ‘employment tax’. If the company doesn’t pay state taxes.. why are the employees being withheld a state tax. I’m sorry if I’m missing something here, this is an area i don’t understand.
I suspect this is different...The employer has to file a 941 (fed) or 940 (forget which) with the Feds and I would bet that Paychex has a serious bond account with the IRS. For the collector of the taxes (in this case, the employer itself) to not remit the money over to an authorized third party I would suspect is a different story. I could be all the way wrong, but I would imagine the Feds would not be happy with the idea of having withholding funds unsegregated in the employers regular checking account.