IRS payroll tax relief can be negotiated in a way to help businesses that owe payroll taxes.
What are payroll taxes?
Payroll taxes are taxes that are paid on the wages and salaries paid to employees by an employer.
These taxes are used to fund government programs such as Social Security, Medicare, unemployment insurance, and other programs.
Employers are responsible for withholding payroll taxes from their employees' paychecks and depositing them with the government on a regular basis.
The amount of payroll taxes withheld from an employee's paycheck depends on several factors, including their income level and the type of tax being withheld.
In the United States, there are several types of payroll taxes, including:
Social Security tax: This tax funds the Social Security program, which provides retirement, disability, and survivor benefits to eligible individuals.
Medicare tax: This tax funds the Medicare program, which provides healthcare benefits to eligible individuals.
Federal income tax: This tax is withheld from an employee's paycheck and used to fund the federal government.
State income tax: Some states require employers to withhold state income tax from their employees' paychecks.
Employment taxes are a significant source of revenue for the government and are essential for funding important programs that support individuals and families.
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Employment Taxes and the Trust Fund Recovery Penalty (TFRP)
Employment taxes are taxes that employers are required to withhold and pay on behalf of their employees. These include federal income tax withholding, Social Security and Medicare taxes, and federal unemployment tax. Employers are responsible for depositing these withheld taxes timely and accurately with the IRS.
The Trust Fund Recovery Penalty (TFRP) is a penalty that the IRS may assess against individuals who are responsible for withholding, accounting for, depositing, or paying specified employment taxes and willfully fail to do so. This penalty is equal to the full amount of the unpaid trust fund tax. The "trust fund" refers to the taxes withheld from an employee's wages (income tax, Social Security, and Medicare taxes) that an employer holds in trust until paid to the Treasury.
The TFRP may be assessed against any person who is responsible for collecting or paying withheld income and employment taxes, or who is required to collect, truthfully account for, and pay over such taxes, and acts willfully in not doing so. This can include a corporate officer, director, shareholder, employee, or any other person or entity that is responsible for managing the funds of the business.
To avoid the TFRP, it is important for businesses to accurately withhold and timely deposit all employment taxes. If a business is having difficulty making the required deposits, it should contact the IRS immediately to discuss available options.
Business Owners or “Responsible Person” and Trust Fund Recovery Penalties
Are You Behind in Your Payroll Filings or Payments and Have Payroll Debt?
You have a good business, but sometimes your cash flow gets a little low and the payroll deposit doesn’t get made on time. Or maybe you just got busy and missed your quarterly payroll return filings.
Whatever the reason, you’re now behind in your payroll tax filings or payments or both.
You might feel like you’re temporarily borrowing the money from the IRS until your business gets back on track, but the IRS doesn’t see it that way at all. The IRS needs that money to make Social Security payments among other things and takes late payroll payments more seriously than just about any other tax problem.
Being Late on Paying Payroll Taxes Is Serious
To the IRS, a late payroll tax payment is considered stealing money from the government, and they have really put some teeth behind enforcement. The most important thing you can do is to get help from a tax representation professional as soon as possible.
Penalties can add up fast. There’s a failure to file a penalty, a Trust Fund Recovery Penalty, interest on the taxes that are late, and the taxes themselves. It can be easy to get into a hole really fast with back payroll taxes due. Plus, it’s taxing on your peace of mind to have this kind of burden weighing you down.
The Internal Revenue Service, state tax agencies, and local entities will send a letter if one of the following happens:
- You miss a payment deadline for payroll taxes due.
- You miss a deadline for filing payroll tax reports.
- An amount paid is short or over what the IRS or another tax agency calculates as due.
- The agency notices a discrepancy on your payroll tax returns and needs an explanation.
- You have been selected for an audit.
- You fail to respond to previous correspondence.
Please note: The IRS will never send you an email about any of the above situations. They always send physical letters. If you get an email, it's a scam.
If you don’t respond to the initial IRS letters, the IRS and other tax agencies can apply liens, levies, garnishments, and seizures in an attempt to collect payment. You don’t want it to escalate to this level.
It’s a great idea to get a tax professional working on your payroll tax problem. They can help you:
- Respond professionally to IRS correspondence
- Get you caught up on filing back tax returns that are late
- Understand the IRS Collections process and your rights
- Negotiate penalties, interest, and taxes due to lower your debt
- Work out a payment plan on any money you owe to the IRS
- Fight for you on issues that come up, such as a “responsible persons” situation
- Help you get levies and liens removed from your assets
If you worked for a company that did not file their payroll tax returns or pays their payroll taxes on time, the IRS may have designated you as a “responsible person.” Do NOT ignore this correspondence!
The IRS aggressively goes after anyone they can when it comes to payroll taxes, even if you’re not the owner of the business. If you have a relationship with a business that is of a particular status, duty, and authority, the IRS can blame you for not paying payroll taxes. And in this case, you are guilty before proven innocent.
It's best to contact a tax representation professional who can argue your case and get your “responsible person” status dropped.
Solutions for Your Payroll Tax Challenges
Contact us at no obligation to you so we can understand your specific payroll tax situation and provide advice on the options available to you. Your tax issue is handled with the utmost confidentiality and privacy.
UNDERSTANDING PAYROLL TAX DEBT RELIEF
Payroll taxes are a type of tax imposed on employers. The amount that needs to be paid comes from a percentage of the salaries. There are two types of taxes: one is being paid by the employer based on the employee’s wages and the other is directly deducted from an employee’s wages.
Debt accumulation occurs when the taxes are not paid. Even if one is forced to close his or her business, the party is still liable for their outstanding taxes. In this case, the affected party should seek professional assistance to determine the best course of action to resolve the tax debt problem – payroll tax debt relief.
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