Payments of 941 payroll taxes are very important to an invoice factoring company. An accounts receivable factoring company will require their client have all their payroll taxes paid up to date on a regular basis. The factor has regular procedures in place to oversee these taxes are being paid timely. The reason being; the IRS does not fool around with payroll taxes. Unpaid payroll taxes are a severe liability that go past the corporation and remains owed and due by the business owner personally.
An invoice factor is concerned because the Internal Revenue Service will step in and demand all monies coming into the delinquent company which would include payments on invoices where the factor has made advances. In other words, the receivable factoring company having purchased the proceeds on an outstanding invoice would now watch the IRS collect from the account debtor (customer). Considering a factor wants to mitigate all risks associated with advances on invoices, insuring current payroll tax payments is a high priority.