What is the consequence of failing to match employee contributions to FICA?

Failing to match employee contributions to the Federal Insurance Contributions Act (FICA) can lead to legal penalties imposed by the IRS. FICA mandates that both employers and employees contribute to Social Security and Medicare taxes. When an employer does not meet their obligation to match these contributions, it violates federal tax laws. This can result in serious repercussions, including penalties and interest on unpaid amounts, and there may be further consequences for non-compliance such as audits or additional legal actions from the IRS.

Ensuring that employee contributions are properly matched is crucial for maintaining compliance with federal regulations and avoiding financial liabilities that can significantly impact a business's operations and reputation.