Small-firm HR reps: Beware the 100% tax trap.

Under the U.S. tax code, the IRS can assess you personally for 100% of your organization's unpaid payroll taxes if you're a "responsible person" who willfully fails to deposit those taxes. (IRS section 6672)

You're considered a responsible person if you simply have some check-signing authority.

You don't need to be a corporate officer or the company's only responsible person. And all it takes to willfully fail to deposit payroll taxes is to pay other creditors before paying the IRS.

Consider this cautionary HR tale: A Pennsylvania woman was the HR supervisor of a family-owned business run by her brothers. The brothers asked her to become the unpaid treasurer of the business. She endorsed several checks to the company's creditors and signed one Form 941.

When the business failed to deposit $24,000 in payroll taxes, the IRS held the woman personally responsible for 100% of those unpaid taxes.

She tried to have the tax bill reduced, claiming it was uncollectible. The IRS rejected her offer and filed a notice of levy against her assets. She sued, but the Tax Court said she had to pay up. (Eichler...