In addition to owing unpaid employment taxes on a misclassified employee, the IRS will likely charge interest on the back taxes and may levy penalties.

Additionally, the State of Colorado could order the employer to pay missed unemployment insurance premiums, plus interest, and issue fines: 

• $5,000 for a first offense, per misclassified worker, and

• up to $25,000 per worker on subsequent offenses.

After a second offense, an employer can be barred from contracting with, or receiving funds from the state.

Failing to pay employment taxes has serious consequences from fines to criminal charges. 

Businesses face a failure to deposit a penalty of up to 15 percent of the unpaid amount.  

Individuals can incur a Trust Fund Recovery Penalty equal to 100 percent of the unpaid taxes.

If the IRS attempts to hold you personally liable for employment taxes, you do have some possible defenses.

For one, your role in the company doesn't automatically make you responsible. You can argue that you did not have the status, authority, or duty to determine how or whether employment taxes got paid. You can even make a case, if it’s true, that you were directed by a superior not to make payments. 

If you have been accused of not paying employment taxes, it’s important to consult an experienced tax attorney to defend these allegations.