Potential tax penalties can be civil or criminal. Most civil penalties are assessed in addition to any tax due. Civil penalties assessed for employment tax purposes include a penalty for failure to pay taxes due (including the trust fund recovery penalty), penalty for failure to file a timely tax return, penalty for paying with a bad check, accuracy-related penalty for underpayment of tax due to negligence, and a penalty for aiding and abetting the understatement of tax due.
Criminal penalties concerning employment taxes are punishable by fines, imprisonment, or both. Criminal provisions apply to willful attempts to evade or defeat employment taxes and willful failure to collect taxes, pay taxes, or file employment tax returns. These criminal provisions include willful failure to collect and pay over taxes, failure to pay over taxes after notice, failure to furnish W-4 information, furnishing a false W-4 form, and supplying false withholding information. These offenses generally have a statute of limitations of three years.