With Payroll Deposits Due September 15, Mid-Atlantic Law & Tax Explains When Withheld Taxes Become a Personal Debt
WASHINGTON, United States – September 11, 2026 – Mid-Atlantic Law & Tax, a tax law firm with offices in Washington DC and Warren, New Jersey, has set out how the trust fund recovery penalty reaches business owners and staff personally, ahead of the September 15 monthly payroll deposit date and the third-quarter Form 941 return that follows it. Employment tax deposits run on a fixed schedule. Monthly depositors owe the taxes on August payments by September 15, and the quarterly return covering July through September is due by the last day of the month that follows the quarter. That last day falls on a Saturday in 2026, so the deadline moves to the next business day.
The amounts withheld from employee wages are held in trust for the government. Where they are not paid over, the Internal Revenue Code allows the IRS to assess a penalty equal to the unpaid trust fund portion against any person responsible for collecting and paying over the tax who willfully failed to do so.
“A business under cash pressure meets net payroll first and the deposit second, and almost nobody experiences that as a decision at the time,” said James A. Kraehenbuehl, the firm’s attorney. “It becomes one later, when the IRS is deciding who was responsible and whether the failure was willful. In our experience the owners who end up worst off are the ones who assumed the debt stopped at the company, because that assumption usually holds right up until an interview is already scheduled.”
Who the IRS Can Reach
Responsibility is determined by function rather than by title. The IRS looks at who had the authority to decide which creditors were paid, and more than one person can be assessed for the same liability. Owners, officers, partners, controllers, bookkeepers and employees with authority over the funds can all fall within it on the right facts. The assessment is personal, and it survives the closure of the business, so dissolving an entity does not resolve it.
Why the Investigation Stage Decides the Outcome
The interview establishes the factual record on which both responsibility and willfulness are later argued. Questions about check-signing authority, who approved payments, and what was known about the shortfall produce answers that are difficult to revisit afterward.
We advise business owners to take advice before that interview rather than after it. By the time an assessment notice arrives, the record it rests on has usually already been made.
What We Advise Doing Before the Deadline
Businesses carrying an unpaid employment tax balance should identify the exposure now rather than waiting for a notice, establish which individuals within the organization would be considered responsible, and get advice before answering questions about payment decisions.
Our existing guidance on these matters is published on the firm’s site, including our trust fund recovery penalty defense explainer and our note on what the trust fund recovery penalty means in the Washington DC metro area.
About Mid-Atlantic Law & Tax
Mid-Atlantic Law & Tax is a tax law firm with offices in Washington DC and Warren, New Jersey, serving individuals and businesses across the District of Columbia, Maryland, Virginia and New Jersey. The firm handles IRS collection defense, examinations and appeals, penalty abatement, payroll tax and trust fund recovery penalty matters, and state tax controversies in the jurisdictions it serves. Full service detail is available on the firm’s services page.
Media Contact James A. Kraehenbuehl Attorney, Mid-Atlantic Law & Tax 1717 K Street NW, Suite 900, Washington, DC 20006 [email protected] (202) 978-2888 Consultation requests via the firm’s contact page
Media Contact
Company Name: Mid-Atlantic Law & Tax
Contact Person: James Kraehenbuehl
Email: Send Email
Phone: 202-978-2888
City: Washington
Country: United States
Website: https://midatlantictaxresolution.com/
