Payroll Tax Problems: Delinquent Payroll Taxes and Payroll Tax Penalties FAQs

Why is it important to resolve payroll tax problems?

IRS penalties from delinquent payroll taxes can add up to about 33% PLUS interest in just 16 days after you have filed the 941 (payroll Tax Return) past the due date and didn't pay! You can imagine what the debt adds up to if you ignore this for a prolonged period of time. You also risk losing your business, having your assets seized and being personally liable!

When it comes to payroll tax debt, the IRS collection Revenue Officer has unyielding power and authority. They have the power to padlock your front doors, putting you out of business, without obtaining a court order. No other creditor in the world, (not even the President of the United States) can do this. They can seize your machinery and equipment. They can contact your customers, and if your customers owe you any money, the IRS will intercept these funds through their powerful levying authority. Do you think your customers will want to do business with you after that? I don't think so.

What are the most common reasons payroll tax problems arise?

If an employer does not make required payroll tax deposits because they are in a cashflow crisis and only intend to borrow funds for one or two pay periods until things improve, usually financial problems continue to get worse and more deposits are missed until there is a significant problem spanning many quarters

In this weak economy, many businesses - both big and small - are struggling to make their payroll tax deposits and many are falling behind. Payroll tax problems can be the "kiss of death" for many business owners as IRS payroll tax penalties can add up quickly! Payroll tax debt should not be taken lightly - IRS levies on wages and bank accounts can cause you to lose your business!

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How does the IRS determine who to assess payroll tax penalties against?

There are two tests that the IRS uses to determine the responsible party for payroll tax issues: If the IRS can prove that you were willful and intentionally (very low thresholds) didn't file and/or pay your employment taxes, it may be considered a federal crime.

So the IRS will need to determine if the person(s) against whom the penalty is proposed was responsible to account for, collect and pay over the trust fund taxes.

Then the IRS will determine whether the person(s) willfully failed to perform this duty, including having knowledge of unpaid payroll taxes or reckless disregard for his or her duty to have knowledge of tax payments

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Who is liable for delinquent payroll taxes?

One or more persons may be assessed with the payroll tax penalties from the IRS for delinquent payroll taxes - they can be assessed jointly and incur several liabilities. You do not have to be an officer of the company to be liable.

The IRS is the most aggressive collection agency with the ability to pierce the corporate veil and go after the owners/shareholders/members individually. Liability for delinquent payroll taxes can be assessed against CPAs, EAs, accountants, and bookkeepers.

While the law merely looks to the elements of responsibility and willfulness when assessing payroll tax penalties, the key to liability is determining who has control of finances within the employer corporation or business - such as those persons with the power and responsibility within the corporation to assure for seeing that withheld taxes are collected and paid. This often applies to those with ultimate control, like signers on the bank account.

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What happens if you can't afford to pay your payroll taxes or fall behind on payroll tax deposits?

Because of the growing tax gap, more and more Americans are facing audits - as well as intrusive, and sometimes illegal, collection tactics by the IRS. Small business owners need to know how to resolve payroll audits to protect the future of their businesses.

Generally, owing payroll taxes is the "kiss of death" for many small business owners, and many lose their businesses. Your payroll tax debt and penalties can add up quickly! And it's important to note that the IRS is the only creditor on the planet that can pierce the corporate veil and go after the owners/shareholders/members individually. They do this by assessing what's commonly referred to as the Trust Fund Recovery Penalty (TFRP).

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What is the Trust Fund Recovery Penalty?

Congress passed the Trust Fund Recovery Penalty to encourage prompt payment of withheld and collected taxes. It imposes a penalty on responsible third parties.

Also known as the 100% Penalty, it is considered a civil penalty that only applies to collected taxes (like Social Security) and withholdings and does not apply to the employer's portion of FICA, Medicare, 940 taxes or income taxes of the corporation.

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How much does it cost to get payroll tax help?

We charge our clients on a fixed (flat) fee basis for our expert tax relief services. Typically, 30% - 50% of the total fee is due before we can legally begin work on resolving your payroll tax issues. Then we can finance the balance of your retainer in 2-6 equal monthly payments. However, you will know at the time of your initial Free Confidential Consultation, how much you will have to pay, in total, to permanently resolve your payroll tax issues. We do not charge for Faxes, photocopies, phone calls, correspondence, or meetings, as do many other firms and tax attorneys.

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What do I do if I get audited for late payroll taxes?

The best thing to do to increase your chances for tax relief is to get expert representation! Fighting the IRS on your own is a "lose/lose" proposition. You WILL get "creamed." It's like to going to court without a lawyer. You risk losing your business, having your assets seized and being personally liable! If you are struggling to overcome your tax burdens, know that there's a solution to every problem.

What do you think happens when the IRS shows up at your place of business and starts asking your receptionist some very innocent sounding questions that he/she is just more than willing to answer? I can't begin to tell you how many times, as unintentional as it may seem, truthful answers to their questions can seal your fate for good. See what you do not realize is that you have rights, many rights, which must to be protected. We know what those rights are and we hold the IRS responsible for respecting, upholding and protecting those rights. This is the law.

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If you owe payroll taxes, get help quick before it's too late! If you plan to go it alone, know that you will get clobbered, or even worse (lose your freedom), without expert and proper representation. You are way out of your league on this one! You REQUIRE experienced Tax Attorneys and/or a Certified Tax Resolution Specialist who has handled hundreds of these cases.

Get free tax relief consultation today or call 866-IRS-Problems.