Dealing With Unpaid Payroll Taxes
One of the most serious tax violations involves the failure of an employer to send in payroll taxes which have been withheld from employee pay. Despite the seriousness of the issue this is also one of the most common tax problems. The IRS must give employees the benefit of all taxes which were withheld by employers no matter whether those taxes were actually paid into the government program. The payroll taxes held back are meant to go into a trust fund for the federal government and never, ever belong to the employer therefore every single employer who withholds payroll taxes from his employee’s paychecks is a trustee for the U.S. government in a sense. Should an employer fail to turn over all monies withheld, it is considered by the federal government to be theft of governmental money.
The Installment Plan Just for Business Taxpayers
Employers who have inadvertently gotten behind in their deposits for payroll taxes can count on the fact that the IRS will pursue them aggressively fearing the business owner might go out of business or will keep using the funds as their own. In fact, failing to pay payroll taxes is akin to being involved in a pyramid scheme. Businesses who can honestly say they have taken steps to correct the problem, can show how they plan to keep up with the tax deposits and can show they are turning a good enough profit to stay current while making regular payments on the unpaid balance may qualify for a monthly payment plan.
Penalties Assessed
Should you fail to pay your payroll taxes as you should have the IRS can assess a severe penalty against you which is equal to the payroll taxes you neglected to pay. This penalty can be assessed against more than one person in the business and can be assessed against those who were neither shareholders nor officers. In some instances of willful non-payment or misappropriation of payroll tax funds, the person involved may end up with criminal charges against them in addition to fines and penalties.
How Do Such Problems Arise?
In some cases a business is simply short on cash and rather than failing to pay the rent or the suppliers, the owner can rationalize that the IRS moves slowly and it will likely be some time before they catch up with the failure to pay. Hopefully by that time they will have enough money to pay the back payroll taxes. Although this sounds good in theory it is truly a recipe for disaster. The payroll problems keep growing steadily with penalties and interest adding up at an alarming rate. By the time the IRS agents actually show up, they are likely threatening to close the doors of the business. Other times incompetent or flat out dishonest employees may neglect to pay the payroll taxes, keeping the money for themselves and hiding the fact from their boss.
Getting the Help You Need
If you were a victim of a dishonest employee, if you meant to pay the payroll taxes but simply didn’t have the money, or even if you can plead ignorance and say you were unaware you were supposed to send in the money, you need a competent, experienced attorney to help dig you out of the IRS hole you are in. A competent tax attorney can negotiate a settlement with the IRS to reduce your penalties and may be able to prevent the IRS from closing your business. A knowledgeable tax attorney may also be able to stop the IRS from holding you personally liable in the event a dishonest employee failed to remit the payroll taxes. While the IRS has considerable power, you still have rights so work with your attorney to ensure your payroll tax issues are resolved.