Showing posts from August, 2014

Even Tax-Exempt Organizations Have to Pay Payroll Taxes

What's the first thing that comes to mind when you hear "tax-exempt?" You might think that tax-exempt means the organization does not pay any taxes. Actually, tax-exempt organizations carry the responsibility of payroll taxes.

Let's look at some numbers from the Treasury Inspector General for Tax Administration (TIGTA). According to the TIGTA, 64,000 tax-exempt organizations have failed to pay federal taxes. In total, these missing taxes amount to almost $875 million. Many of the 64,000 organizations owe small amounts. Over 1,000 of these organizations owe more than $100,000 each. Some tax-exempt organizations have not payed for ten years.

Payroll taxes comprise 67% of federal revenue. The remaining 33% of federal tax payments come from excise tax, penalties, and other taxes. Many tax-exempt organizations perform important services in our communities. Because of this, debt collection can be difficult. Seizing property of serving levy actions could deprive communities …