For payroll tax purposes, withholding is the mechanism that taxing
authorities use to compel employers to collect taxes owed by their employees on
their wages and other compensation. Withholding essentially requires employees
to pay their taxes on a "pay-as-you-go" basis. For example, the object
of income tax withholding is to collect currently as wages are paid most of the
income tax liability employees will report on their personal tax return from
having received the wages. Part and parcel with the obligation to withhold tax
is the obligation to timely deposit the withheld amounts with the appropriate
authorities. Although withheld taxes represent amounts owed by your employees,
you effectively become personally liable for those taxes if you fail to properly
withhold or deposit them.