Wow - "Oops, we forgot to pay payroll taxes for three years" isn't good. How does nobody notice that?
But lessons learned and all that. I can't stress enough (at least from having run a small business) that accounting is the number one thing to get correct from the get-go. It saves such an immense amount of time, money and stress later on.
It's rather surprising that the IRS wasn't dramatically more aggressive about this. Every year they had people submitting tax returns claiming taxes paid that weren't paid, for years. I would have expected the IRS to have searched the Earth for this company.
I understand that they sent some mailings, but at some point...months in, or even years in...you would expect an investigator to be tasked with hunting this company down. That ultimately is not a difficult task (aside from obvious and trivial web searches, contacting one of the employees who claimed to have paid tax, the government getting none of it). This seems like the sort of oversight that in most cases would leave the government holding the bag.
The way the tax office works is simple: the biggest holes get plugged first, the smaller ones can wait until they've become either big holes or until they've been resolved.
Usually they are resolved. By the time a small company has developed a big enough hole for the tax company to start tasking people with plugging the hole you're in very very hot water.
It's a resource allocation problem like any other.
But lessons learned and all that. I can't stress enough (at least from having run a small business) that accounting is the number one thing to get correct from the get-go. It saves such an immense amount of time, money and stress later on.