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What Are Solutions To Payroll Tax Debt Other Than Declaring Bankruptcy?

Oftentimes, business owners who owe payroll tax will need to shut the business down. Either the IRS will try to forcibly shut the business down or the business will just need to go out of business since it is unable to make payments on its payroll tax. In lieu of doing this, the business can try to enter into an installment agreement with the IRS to attempt to resolve the unpaid taxes. Also, while trust fund penalties cannot be discharged in bankruptcy, the owner is able to submit an offer in compromise as an individual if he is unable to pay the trust fund penalties within the collection statute.

If My Employees Fail To Pay Their Payroll Tax Debt, Is That My Problem As The Business Owner?

Yes, you as the employer are responsible for withholding payroll taxes directly from the employee’s paycheck. So, the employer ultimately has full control of the payroll taxes being paid to the IRS. The IRS requires the employer to withhold the funds directly from the employee and only pay the net amount to the employee after income tax, social security tax, Medicare tax as well as state disability insurance are withheld.

How Does The IRS Pursue Payroll Tax Collections?

The IRS aggressively pursues unpaid payroll taxes. Generally, if there are more than $50,000 in payroll taxes owed, an IRS revenue officer will be assigned to the case. These IRS revenue officers are notorious for stopping by the place of business and requesting an immediate interview. In these instances, the business owner should respectfully state, “Thank you for coming in but I will have my attorney contact you”. The IRS will also attempt to place liens and levies on the business. They will try to shut the business down by levying bank accounts and making it difficult for business owners to conduct business. They will try to schedule any interviews through their summons authority with business owners as well as employees to determine who to assess trust-fund recovery penalties against.

When Should I Use The IRS Voluntary Classification Settlement Program?

The Voluntary Classification Settlement Program(VCSP allows employers to re-classify workers and employees for future tax payments if they believe they misclassified the workers in the past. The employer will be required to pay 10% of the amount that would have been due for the most recent year and the business will be able to avoid any penalties or interests. The VCSP program can be used at any time if the business is not currently under audit and it is a great program for businesses that want to get back into compliance.

How Long Can The IRS Audit My Business?

Generally, the IRS can include annual returns, payroll or income tax returns filed within the last three years in an audit. If the IRS identifies a substantial error, they might go up to 6 years if they determine fraud is involved in preparing the returns or on misclassifying the workers. If they believe there is criminal conduct involved, the state of limitations does not apply.

What Is The Difference Between A Tax Attorney And A CPA When It Comes To Hiring Someone To Help With My Business Tax Debt Audit Or Issues?

Payroll tax issues always come down to the facts and circumstances involved in a specific business. While CPAs do a great job at preparing and filing income and payroll tax returns, CPAs are generally not trained to respond to IRS assessments, researching case law, and submitting memorandums to the IRS to lodge a successful appeal. As an attorney, I have successfully represented numerous taxpayers in worker classification disputes and I have been successful in maintaining independent contractor status for employers, avoiding assessment of trust fund recovery penalties as well as settling trust fund recovery balances through the offer in compromise program, and even filing petitions with tax court on notice of determination and proposed balances and to oppose trust fund recovery penalties.

These are all actions that a CPA is unable to take if you do run into payroll tax problems. So, I always suggest to seek the advice of an attorney if you have serious payroll tax issues.

For more information on Solutions To Payroll Tax Problems, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (714) 321-3369 today.

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