The Importance of Resolving Payroll Tax Problems

If you owe back taxes on outstanding payroll and employment taxes, it’s critical to resolve payroll tax debt as soon as possible to safeguard your company’s future. The IRS assigns a higher priority to collect employment taxes than income taxes.

When payroll taxes go unpaid, it can create a domino effect that leads to enormous problems for the business owner. These include late penalties and interest, as well as potential criminal charges. The best way to avoid these consequences is by resolving payroll tax problems before they happen. And if they do, know the steps to resolve your payroll tax problems before they get worse.

How Payroll Tax Problems Begin

If you own a company and have workers, you’re undoubtedly aware of the difficulties of calculating and paying payroll taxes. It may be challenging to figure out how much to pay, when to pay it, and what to do if you find yourself unable to pay your payroll taxes due. Issues with payroll taxes begin when businesses either fail to calculate the correct amount of taxes or don’t pay on time, leading to penalties and interest accruals.

An IRS notice is sent to you if they determine you are non-compliant with payroll tax deposits and filing. You will get an IRS letter notifying you of the penalty. You have 60 days in which to appeal. If you don’t reply to the letter, the IRS will send you a Notice and Demand for Payment, after which it may take collection actions.

What’s the worst that can happen?

Miscalculations and missed payments can happen, and it may take the IRS months or years to notice; however, penalties and interest will add up and debt may grow to an unmanageable amount. Moreover, once the IRS discovers that you’ve failed to deposit, file, or pay your payroll taxes, you may face harsh consequences that could ultimately mean the end of your business, including hefty levies, fines, property seizures, ​license suspension, or even criminal charges.

The government takes payroll tax debt so seriously that Congress passed a law allowing the IRS to charge the Employment Taxes and the Trust Fund Recovery Penalty (TFRP). The TFRP encourages prompt payment of employment taxes. When employers fail to make a federal tax deposit in the right amount, the IRS applies the TFRP, which are trust fund taxes. Since you hold the employees’ money, the TFRP will apply against any principal in the company that should have known the payments were being made. Even if you were not the one who was responsible for making the payments, if your position was such that you should have known if the payments were being made, you can be held liable. The IRS calculates the TFRP by adding the unpaid income taxes to the employee’s share of FICA taxes. Employers can be fined a failure-to-deposit fee of as much as 15% for not making timely payroll tax deposits. Once the TFRP is asserted, the IRS can begin taking collection actions against the personal assets responsible for collecting and paying withheld income and employment taxes. 

Resolving Payroll Tax Problems

If you owe payroll taxes, don’t put your business at risk and immediately resolve payroll tax debt. You may qualify for a payment plan such as an installment agreement, a reduction, or forgiveness of penalties. The reason for your noncompliance may determine the payroll tax resolution option which works best for you.

Contact Golden Tax Relief today,​ and we can help you with your payroll tax problems before the situation gets worse. 

Call Golden Tax Relief at 844 229 8936 today. 

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