The IRS claims that businesses have withheld billions of dollars in employment taxes that have never been paid. Congress has recently criticized enforcement efforts and in turn the IRS has made collecting these taxes one of their most important tasks. Since the 2002 tax year revenue agents have nearly doubled their success in collecting against past due business accounts. Businesses shutting their doors or experiencing financial hardship resulted in $30 billion in outstanding payroll liability being classified as not collectible last year.
IRS efforts to speed up collections will be focused on the more timely filing of liens and levies, as well as an expedited process to assess the Trust Fund Recovery Penalty. When a business shuts down, the owners, officers and other responsible parties are assessed a Trust Fund Recovery Penalty. This penalty (commonly known as the 100%) penalty represents the "trust fund" portion of an employees wages withheld from each paycheck. The employees' portion of social security and medicare taxes, plus federal income tax withheld from wages is the "trust fund" portion. When applied, the penalty is assessed personally against the owners, officers and responsible parties of the defunct business.

These penalties are not dischargeable in bankruptcy and carry joint and several liability. This means that each party determined to be responsible is obligated to pay the entire penalty and must seek redress from the other parties if the IRS is able to collect the outstanding balance from a single party. This carries particular weight with small and closely held businesses that have a single or small number of stockholders that may serve as officers as well. In other words, really be careful who you go into business with. If you are the "money" behind the "brains" in a business venture and it goes south, the IRS will collect from you, leaving you to collect from the "idea" guy.

S Corporations are particularly at risk considering the establishment of new audit operations targeting these businesses and their desire to "reclassify" profits as wages for self-employed owners. A self-employed small business owner is not only at a substantially increased risk of being audited, but the result of that audit could be disastrous with thousands of dollars in penalties and interest from profits being reclassified as wages to the owner, in addition to the new underlying tax liability. A single year's audit could put many S corps out of business, leaving the owner personally liable for back payroll taxes. If you are a small business owner faced with an audit, seek professional help before, your first contact with the IRS examiner. Failure to do so could cost you not only thousands in additional taxes, but your livelihood as well.

IRS Promises They Can and Will Do Better Collecting Payroll Taxes is a post from: IRS Tax Problem Solver Blog - IRS Help

Facts About Payroll Taxes

You withhold taxes from your employees' paychecks each pay period if you run your own business. These are FICA contributions (Medicare and Social Security) and federal and/or state income tax. The income tax withheld is based on the number of exemptions each individual employee claimed when the individual started working . FICA is a part of the employee's gross earnings. Your business need to match the FICA amount partially or fully. A bank qualified as a depository for federal taxes is where the money is deposited. Your payment must be accompanied by a federal deposit form.

Entrepreneurs must pay the taxes to the IRS, whether monthly or quarterly, depending on the size of the payroll. Your business serves as the government's collecting agent. Your employee's taxes are entrusted to you until you make the payment.

The IRS also requires business owners to submit:

• Form 940 or Employer's Annual Federal Unemployment Tax Return reports your total quarterly payroll tax deposit, the amount used to determine federal unemployment tax that must be paid by the business, not the employees, and is submitted once a year.
• Form 941 (Employer's Quarterly Federal Tax Return) quarterly. This reports the amount of your employee's federal income tax and FICA that was withheld for the previous quarter.

Numerous business are neglectful in paying and filing their employment taxes, according to the IRS. Businesses that haven't paid taxes are illegally borrowing money from the U.S. Keep in mind that revenue officers can actually seize your assets and close your business if you owe back taxes.

Pay Uncle Sam first – make settlling your taxes a priority to minimize your payroll tax issues. Utilizing a bonded payroll tax service is something to think about. They'll file and do your payroll tax deposits. The penalty for late forms or late payments are shouldered by the service.

If you need help with a Payroll Tax Problem, it's important to find a qualifed Tax Attorney such as Darrin T. Mish. He represents businesses all over the United States with Payroll Tax Problems. Give him a call tollfree at (888) 438-6474.

Avoiding Payroll Tax Problems – the best policy is a post from: IRS Tax Problem Solver Blog - IRS Help

Addressing Payroll Tax Problems

Are you a business owner who has been unable to settle payroll taxes? Has the IRS sent you notices about non-receipt of 941 payroll returns? Did you file your payroll taxes late because you did not have the funds to cover it?

It's a common practice for businesses having financial issues to submit payroll returns late and to hold off paying payroll taxes. You're using your employees' money to settle your other debts when you fail to submit payroll taxes. If your business is having issues, this is a bad idea. You're just creating additional issues for you and your business and also adding IRS problems to your list.

Failing to File Payroll Taxes

The IRS starts adding interest and penalties to your tax debt if you do not file your payroll taxes when it's due. If your business has cash flow issues, this will just add to your issues.

Payroll Returns

Failing to submit payroll returns by the deadline will increase the penalties that the IRS can attach to them. Penalties can range from five per cent to twenty-five per cent each month. Your tax issues are escalating because interest is compounding and the penalties are accruing.

The IRS may use enforced collection on you by putting a levy on your business' assets or putting you out of business if you dismiss the notices they serve about your payroll tax issue. Call our firm, instead.

What happens now?

If determined that the non-payment or late filing of payroll taxes was your fault, you'll be paying a Trust Fund Recovery Penalty that includes payroll taxes and accumulated penalties and interest.

Your Options

You must know what your rights are. You have to find out if the figure assessed is the correct amount. Find out if you can qualify for an installment agreement or Offer in Compromise. Know if they will seize your assets. You need someone working for you.

Looking for a Miami Tax Attorney? Conveniently located in Florida, Darrin T. Mish represents companies with payroll tax problems all around the United States. Give him a call tollfree at (888) 438-6474.

Payroll Tax Problems with your business causing you undue stress and anxiety? is a post from: IRS Tax Problem Solver Blog - IRS Help