Payroll Taxes

Don't wait. Contact us now. We can help. If you continue to ignore the problem, it will only get worse; much worse. If you wait too long, you can lose your rights to challenge the tax assessment.


  • Have you received notices from the IRS demanding 940 or 941 payroll returns?

  • Have you been unable to pay your payroll taxes or are you making payments on old taxes?

  • Did you forget to file your payroll returns?

  • Didn't file your payroll returns because you couldn't afford to pay?

  • Is the IRS threatening to levy your bank account or close your business?

  • Has the IRS recently proposed a "Trust Fund Recovery Penalty" assessment against you as the responsible person?

  • If you are making payments to the IRS on previous payroll taxes, are you making the right type of payment?

  • Will you qualify for an offer in compromise or an installment agreement?

 


The IRS continues to use Enforced Collection when it comes to unpaid payroll taxes and unfiled payroll returns. Enforced Collection can include a levy on the assets of the business, including the accounts receivable, equipment, automobiles and the bank account. The IRS can also close a business for non-payment of payroll taxes. If the business is closed or files for bankruptcy protection, the IRS will look to the owner of the business for collection of the penalties, interest, taxes and trust funds. In the case of a corporation or a partnership, the IRS will look to the person responsible for paying the payroll taxes to collect the trust funds. This is known as the Trust Fund Recovery Penalty.

For many businesses, when they start to have financial problems one of the first things to happen is the payroll taxes are not paid on time and the payroll returns are not filed on time. Both of these are among the worst things to do when a business has fallen upon hard times.

Failure to Pay Payroll Taxes on Time

Criminal Tax Attorneys San DiegoWhen a business fails to pay the payroll taxes on time, penalties and interest start to accrue. This causes additional cash flow problems for the business when cash is such an important commodity.

Late Filing of Payroll Returns

If the payroll returns are not filed on time the penalties are substantially increased. Failure to file a return on time can incur penalties of 5% per month to a maximum of 25%. Add that to other penalties, along with the compounded interest and you can have a very serious tax problem.

Trust Fund Recovery Penalty

IRC Section 6672(a): Any person required to collect, truthfully account for, and pay over any tax imposed by this title who willfully fails to collect such tax, or truthfully account for or pay over such tax, or willfully attempts in any manner to evade or defeat any such tax or the payment thereof, shall, in addition to other penalties provided by law, be liable to a penalty equal to the total amount of the tax evaded, or not collected, or not accounted for and paid over.

This is commonly known as the 100% penalty. The penalty is assessed for the Trust Funds not paid. Trust funds are the money you withhold from an employee's paycheck, which includes federal income tax and the employees' share of FICA and Medicare. This money is held in trust until you pay it to the Internal Revenue Service.

  • Are you the "responsible" person?

  • Did you "willfully" fail to collect or pay over such tax?

  • Did you have knowledge that the payroll taxes were unpaid?

  • Did you have the power to control payments to creditors or the IRS?

  • Did you prepare or sign the 941 returns?



Who is a responsible person? It may be the person who has the power to direct the collection of trust funds, the power and authority to pay trust funds and other creditors, or power and authority to determine who gets paid first or last.

According to the IRS, a responsible person is a person or group of people who have the duty to perform and the power to direct the collecting, accounting and paying of trust funds. This person may be:

  • an officer or an employee of a corporation

  • a member or employee of a partnership

  • a corporate director or shareholder

  • a member of a board of trustees of a nonprofit organization, or

  • another person with the authority and control to direct the disbursement of funds.

The IRS may assess the penalty against anyone:

  • who is responsible for collecting or paying withheld income and employment taxes, and

  • who willfully fails to collect or pay them.

According to the IRS, for willfulness to exist, the responsible person must:

  • Have known about the unpaid taxes, and

  • Have used the funds to keep the business going or allowed available funds to be paid to other creditors.

  • Other standards regarding willfulness include intentional, deliberate, voluntary, reckless disregard, knowing or accidental, free will or choice.

Federal Tax Audit AttorneysThe issues presented in determining who the responsible person is and whether or not willfulness exists depends upon the facts and circumstances in each case. If the taxes are not paid, the IRS will be looking for someone to penalize. It may be you.

If the IRS is planning to assess the Trust Fund Recovery Penalty against you, or if they have already assessed the penalty against you:

  • Do you know what are your rights are?

  • Are you the person who should be assessed, or is it someone else?

  • Do you know if you have been assessed the proper amount of "Trust Funds"?

  • Will you qualify for an "Offer in Compromise"?

  • Can you qualify to make installment payments?

  • Will you lose your home, your bank account, your car or your life savings?

  • Will you qualify for an offer in compromise or an installment agreement?

Don't wait. Contact us now. We can help you with the answers to these questions. Don't ignore the problem, time is of the essence. Waiting only causes you to lose your rights and makes the problem worse, much worse.

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Recent Payroll Tax Questions
 
  • Greetings we had a bad year and were not able to pay the payroll taxes last year. We are now on some better footting and able to pay however we want to try and get a settlement with IRS to pay the approx 16,000 due in payroll taxes over 16 months at 1000 per month with no penelties, BUT WIth Interest. We have not have any problems in past with IRS so this would be first offence. please advise what our options are.
 
 
 
  • I was referred to you by a friend and regarding a tax question I have. I'm the owner and officer of an S-Corporation and have been recently accepted to the Executive MBA program. Through my admittedly ametuer internet searching, I have found I seem to meet all the criteria to make this deductible to the s-corp as a business expense, and to me as a working condition fringe benefit. My CPA is taking the more conservative line that it is only deductible up to the 5200 yearly limit for a Educational Assistance Program (which I don't have and don't want to use if I don't have to).

    What is your opinion on the deductibility of the expense as a WCFB assuming I meet the criteria offered by the IRS? Why does everyone on the internet seem to do it anecdotely, but I'm meeting such stiff resistance from my CPA?

    If this issue requires more detailed analysis of my specific situation, please contact me so we can arrange payment. I need to get this resolved asap so I can proceed with the admissions process.
 
  • I had a divorce in 2000 that involved a community property business. My ex left me a business after he kept EDD Payroll tax monies from staff. The business is no longer in existence. I completed an OIC and paid it with the IRS. The EDD then contacted me. I tried speaking with the tax compliance officer and she wouldnt return my calls. I then last week received a 48 hour to pay $15,000 + or involuntary of assets can be taken. I'm on a fixed income in a high cost of living area. I'm assuming its wage garnishment. I intend to file an OIC this weekend if I cannot retain an attorney. At this time I can afford to pay $300 a month if installments long term. And would have to get help (if can from family) for full retainer or split in small payments. Please contact me via email if interested or available to help. If call at work please be discrete. I have all documents from 1998 - now including court transcrips involving ex theft from community property and me not aware before awarded business.