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Payroll Tax Problems And Ways To Resolve Them
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One of the primary causes of business failure is payroll tax problems. This may include, unfiled payroll tax forms, unpaid payroll taxes owed, a bank levy or other asset seizures, excessive penalties and interest including trust fund penalties.
Payroll taxes can never be discharged in bankruptcy and the liability stick with the company and company owners. As an employer, you must not ignore your payroll tax responsibility and act quickly to resolve issues resulting from unpaid taxes.
When the IRS does not receive a company%u2019s 940 or 941 payroll tax forms, a notice is sent out informing the company of the non-filed returns. If the initial notice is ignored, additional notices are sent out until the return is filed and payroll tax liabilities are paid. You may also incur penalties from 5% to 25% per month as well as interest on the tax debt.
If you continue to ignore the notices and payroll tax liability, the IRS can close your business for non-payment of payroll taxes and go after the owners for the taxes, penalties, interest and they will also issue a trusts fund penalty to the business owner(s). They can seize personal assets until the trust fund is paid back, put you out of business without obtaining a court order or collect your customer funds to pay the tax liability.
Penalties alone for failure to deposit, failure to file and failure to pay can add up significantly thus increasing your payroll tax debt. Your business and the owners can also be referred to the IRS criminal investigations division if they can determine that you willfully didn%u2019t file or pay your taxes.
If a business want to stay compliant and out of trouble with the IRS or state taxing authority, they must not keep payroll taxes to pay other business expenses or for the owner%u2019s personal use. These funds are to be kept separately from other funds if necessary and paid before the payroll tax deadlines.
If you are facing payroll tax problems with the IRS here are some ways you can resolve them:
1. File and pay all payroll taxes if funds are available.
2. Contact a qualified CPA, Enrolled Agent authorized to
represent taxes payers before the IRS or tax attorney.
3. Negotiate a payment arrangement with the IRS or state issuing the notice.
4. Apply for abatement of penalties. This is difficult to get approved but is an option depending on your circumstances.
5. File for an offer in compromise to reduce the payroll tax debt if your business is experiencing financial hardship. This is also difficult to get approved but may be an option.
If you are facing a tax levy, trust fund penalty, a criminal investigation or have excessive penalties and interest and are not able to represent yourself, it is important that you reach out to an experienced tax resolution specialist as soon as possible to resolve your payroll tax issues.
They can handle your case from start to finish, represent business owners in trust fund penalty cases and handle any hearings involving this issue. It is better to tackle the issue that got you in this situation in the first place rather than ignoring the problem.
A payroll tax specialist that handle tax problems may also offer payroll tax services and bookkeeping to automate your payroll process and avoid future tax problems.
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