Every employer required to withhold tax on wages is liable for the payment of those taxes whether or not it is collected. The employer's liability is relieved upon a showing that the employee's related income tax liability has been paid.
Any responsible person, typically a corporate officer or employee, who willfully fails to withhold, account for, or pay over withholding tax to the government is subject to a penalty equal to 100% of the tax. The penalty is a collection device, usually assessed only when the tax cannot be collected from the employer, and results in personal liability that may not be discharged in bankruptcy.
Civil and criminal penalties can also be imposed if an employer willfully fails to furnish or furnishes false or fraudulent W-2's to employees.
Also, failure to timely deposit payroll taxes will result in penalties and interest. The penalty is graduated maxing at 10% of the liability. However, the rate may be increased to 15% after the first delinquency notice.
The botXXXXX XXXXXne is that the Corporation and the responsible party (generally the owner in a small, closely held corp) will be held liable for payroll taxes.
Because it is impossible for me to identify and consider ALL the relevant facts, this advice is not intended or written to be used for the purpose of avoiding penalties, and cannot be used for that purpose.