How to Resolve Payroll Tax Problems
Payroll taxes that go unpaid are going to cause you a world of problems with the IRS. If you’re currently in this situation and feel like you’re stuck between a rock and a hard place, we’re here to help protect you from the IRS’s abusive collection actions.
To prevent this issue from severely impacting your business or even making you close up shop, keep reading to understand the unfortunate reality that unpaid payroll taxes can have on your business, or contact us for free today so we can go over your case.
How easy it is for small businesses to face this problem
With an ever-volatile market, trying to pay your employees may be difficult. What’s more, you then have to consider the payroll taxes on top. A quick fix that many small businesses opt for is to prioritize paying employees first but not the payroll taxes, when funds are short (who wouldn’t?).
However, this is when things start to turn downhill. Although many business owners like the idea of paying 941 taxes in the next period, it’s never recommended. Why? Well, before long small businesses can get into the habit of delaying payroll tax payments until there’s no way out.
This is especially true when the IRS only cares about collecting as much money. Whatever caused this situation to happen in the first place is irrelevant in their eyes. All that matters to them is collecting what is owed by any means they find necessary.
Do You Have Trust Fund Recovery Penalty (TFRP) Incurred?
The Trust Fund Recovery Penalty is when the IRS transfers the business’ payroll tax obligation to individuals, penalizing them for the failure of the business to pay the payroll tax deposits.
The amount you will have to pay if the Trust Fund Recovery penalty is applied is equal to the unpaid balance of the trust fund taxes. This is based on the unpaid income taxes withheld and the employee’s portion of the withheld FICA taxes. With a TFRP case, you have to take care of the issues on the 2 different levels – the “business entity” & the “personal”.
You May Not Be the “Responsible Person” in Regards to Payroll Tax Problems!
If you worked for a company that did not file their payroll tax returns or pay 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 company 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 being proven innocent. It’s best to contact a tax representation professional who can argue your case and get your “responsible person” status dropped.
Is it time to contact the IRS to resolve Payroll issues?
It’s no secret that trying to call the IRS can leave you feeling frustrated. Doing so usually results in being stuck on hold for a couple of hours. Plus, when you do get through, the representative on the other end isn’t that helpful. You will probably have to deal with the troop of newly hired and poorly trained IRS employees.
Their main objective is to acquire financial and personal information about you and the business. This includes knowing who you bank with, what kind of assets you have and their value (cars, homes, etc..), your income sources, and information on customers that have outstanding payments.
Once all of this information has been collected, the IRS has everything they need if they want to take action. For instance, they can keep taking out money from your paychecks, levy bank accounts, seize any properties you have, or take receivables.
So, this can leave you in a situation of not knowing what to do next. Although, there is a solution: find someone to represent you, especially a tax professional who has dedicated his or her life to dealing with the IRS and state. As a result, any issues, including IRS payroll and income tax, can be effectively dealt with by someone experienced in small business issues.
At James M. Cha, CPA & Company, we reach out a helping hand to businesses trying to navigate uncharted waters when it comes to payroll problems with the IRS. Our professionals talk to the IRS on your behalf to ensure you’re not falling into any of their traps.
Any sneaky tactics that the IRS are notorious for using can be avoided, and you won’t need to worry about them constantly calling you or showing up at your door as all communication with the IRS will go through us. Also, we can help lessen outstanding penalties against you with the chance of getting them removed altogether.
Based in LA, California, with the ability to assist clients across the USA, James Cha has over 30 years in the industry. Contact him now at (213) 383-1127 or at James@Taxwise-CPA.com to learn more.
It’s time for you to stop living in fear.
Tell us your tax burdens and take the first step towards true freedom. Schedule your free confidential consultation today.