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How to Handle Delinquent Payroll Taxes

The IRS takes payroll tax compliance seriously. If you have delinquent payroll taxes, you could face severe tax penalties, tax liens, and levies of your assets.

Take action to get into tax compliance and develop a tax resolution plan to avoid having your assets seized.

File Your Returns

The IRS doesn’t like to negotiate with taxpayers who have unfiled returns. If you can’t meet this requirement, you should prioritize getting all of your prior-year unfiled tax returns filed.

Once you’re in filing compliance, the IRS may consider listening to your request for a collection alternative. This could include an installment agreement, Offer in Compromise, or currently not collectible status.

Understand the Tax Penalties

The penalty for failing to deposit payroll taxes is quite severe and increases the longer you delay sending payment. The penalty starts at 2% of the unpaid deposit and quickly becomes 15% of this amount when you fail to send payment within ten days of receiving an IRS notice that demands payment.

The trust fund recovery penalty (TFRP) can also be assessed. This payment is assessed individually to anyone deemed a “responsible person” who willfully failed to collect or submit trust fund taxes. The penalty equals 100% of the unpaid taxes. Because the TFRP is assessed against an individual, you may need to have a separate installment agreement for your business and individual tax debt.

Discuss Your Tax Resolution Options

Your best tax resolution option will depend on a number of factors. You may be required to submit Form 433-B, which is the business version of the collection information statement.

Installment agreements may be a good choice. However, you need to be able to meet your monthly payment and keep up with your current tax obligations. Avoid negotiating an installment agreement with terms that you can’t realistically meet.

If your business is no longer operating, the IRS may agree to place your account in currently not collectible status. However, you may still be expected to liquidate any existing business assets and put the money towards your tax debt.

Payroll tax debt cases can be complex and difficult to manage. Contact a tax attorney to get help developing a plan to resolve your payroll tax problems.

Get help with delinquent payroll taxes by calling The Gartzman Law Firm at (770) 939-7710. We can listen to your concerns and help you find the best tax resolution strategy for your case.