Any lender, surety, or other person who pays wages, or supplies funds specifically to pay wages directly to the employees of an employer, or to the employee's agent, is responsible for any required withholding on those wages. The third party is also liable for any interest and penalties accruing on these accounts. This includes the withholding of income, social security, Medicare, and railroad retirement taxes. If a third party supplies funds to an employer so that the employer can pay the employees' wages, and if the third party knows that the employer will not pay or deposit the taxes that are required to be withheld when due, then the third party must pay the taxes withheld from the employees' wages but not paid by the employer. The third-party supplier must also pay interest on the taxes if they are paid after the due date of the employer's return.
Third parties are liable only for payment of the employees' parts of payroll taxes.
They are not liable for the employer's part. The employer must file an employment tax return for wages that he or she or a third party pays and must furnish Forms W-2 to employees for the wages paid and taxes withheld. The employer also remains liable for any withholding taxes not paid by the third party. Liability of trustee in bankruptcy. A trustee in bankruptcy must withhold, report, and pay income, social security, and Medicare taxes from the payment of priority claims for employees' wages earned prior to, but unpaid at the time of, an employer's bankruptcy.