Small Business Owners Have a $4.5 Billion Payroll Tax Problem

Every month, employers across the U.S. send money to the IRS to cover payroll taxes—levies drawn from employee pay to cover Social Security, Medicare, and unemployment insurance. Many botch the process. The IRS issued 6.8 million penalties totaling $4.5 billion related to these employment taxes for the year ending last September, according to recently published data from the IRS (PDF).

Those numbers are down from 2009, when the IRS issued 7.9 million penalties for $7.1 billion. The government doesn’t say what share of the fines were handed out to small businesses, but large employers are generally better equipped to stay current on ever-changing tax rules.