What MUST be done with the taxes withheld by an employer between the time that they are withheld and the time that they are sent to the IRS?

The requirement that taxes withheld by an employer must be held in a separate account and not used for anything else is rooted in the legal obligation of the employer to manage those funds properly until they are submitted to the IRS. This ensures that the withheld taxes are safeguarded and remain available for their intended purpose, which is to be paid to the government.

Holding the taxes in a separate account helps to maintain proper accounting practices, providing a clear trail of these funds and preventing them from being inadvertently used for business operations or other expenses. This separation is crucial for compliance with tax regulations and to avoid potential penalties or legal issues that might arise from mishandling these funds.

The other options do not align with best practices or legal requirements. For example, keeping the withheld taxes in a general company account or using them for company expenses violates the obligation to ensure these funds are reserved for tax payments. Additionally, putting them into a savings account does not provide the same assurance as maintaining a separate account specifically for tax funds. Ultimately, option C emphasizes accountability and compliance with tax law.