The IRS views failing to pay payroll taxes as the cardinal sin of tax delinquency because a large portion of the payroll taxes are your employees’ withholdings.
Not paying your company’s payroll taxes is equivalent to stealing your employees’ money in the eyes of the IRS. If the IRS even senses that you are trying to avoid taxes by failing to pay payroll taxes, not only will the IRS impose expensive penalties and interest fees, but you could also be charged with a federal crime. Unpaid payroll taxes, therefore, could cause a business owner to lose his or her freedom and could completely close down a business. This means it should be an employer’s primary responsibility to collect federal taxes and the employee portion of Federal Insurance Contributions Act tax and pass this money on to the IRS. Because it is considered a trust tax, the IRS views non-payment of payroll taxes as theft, and the IRS notice process will be accelerated. As a result, penalties for failing to pay your payroll taxes and filing your payroll tax returns on time are much more severe than other types of penalties. They can drastically multiply the amount you owe in a very short time.
The IRS is extremely aggressive pursuing collection of this type of tax. They would rather seize your business assets, close you down, sell your assets at auction, and put you out of business than allow you to continue amassing additional payroll tax liabilities.
If you owe payroll taxes to the IRS, the agency can come after your business assets and your personal assets. A Trust Fund Recovery Penalty (TFRP) is a civil penalty assessed by the IRS against a party, or parties, deemed responsible and willful for not turning over certain employment (payroll) taxes to the government in the form of payroll tax deposits. These taxes are commonly known as trust fund taxes, because employers are required to hold the taxes “in trust” until they are turned over to the IRS. The total unpaid trust fund taxes of a corporation or LLC can be converted to a TFRP against one or more parties (usually the business owners), at which time a business tax liability becomes a personal tax liability of the responsible party. After this occurs, the IRS will begin the collection process against the individual taxpayer.
If you are behind on payroll taxes, it is imperative that you get the help of a professional who understands tax law and the way the IRS operates. The way you handle your initial contact with the IRS can make or break your chances of staying in business. DO NOT meet with the IRS on your own. How you answer their initial questions can determine whether you stay in business or not. It is critical you hire a professional representative who knows how the IRS operates.
If you have payroll tax problems, there are solutions available to you! We have helped business owners resolve their tax debt problems and protect their businesses. We know how important your business is to your income and your livelihood. Creating a solution for your payroll tax problem shouldn’t just be about helping you avoid the IRS; it should be about saving your company from being seized. Most importantly, it’s about safeguarding your freedom.
We help our clients by assessing their current situation and helping them find answers that will best preserve their ability to stay in business. If you are delinquent on payroll taxes, contact us today!