How To Deal With Back Payroll Taxes

Every single quarter, employers are required to pay payroll taxes. They do this by withholding payroll taxes from each employee's paycheck. These taxes are paid to the IRS. The forms that the employers use to fill payroll taxes are normally the 941 and 940 taxes. When employers fail to pay these taxes on time, or avoid paying them for some reason, the company incurs a payroll tax liability.

Unlike other taxes, the IRS does not like it when companies are late or completely disregard filing their payroll taxes. As such they come after the companies hard and are very persistent with collecting the past due amount. Companies think they can declare bankruptcy to get out of paying these taxes. But that won't fly with the IRS. They IRS will not allow any company to get out of paying payroll taxes as long as they are in business.

When a company does have these taxes, their best recourse is to find a solution that will be amicable to them and the IRS. One way to do this is by setting up a plan to pay back the back payroll taxes. Because if these payroll taxes are not paid, the IRS will come after you. Even if you work in a corporation and are just a stockholder, or a member of the board of directors, you will not escape from the IRS. They will collect no matter who they go after.

If you owe back pay roll taxes, not only will you get penalized up to 25-percent, but you can also lose your business or have your bank accounts frozen. This is why you have to settle with the IRS over your taxes. You can negotiate with the IRS and hope they accept your terms. If you keep your current payroll tax payments going and on time, they will more than likely work with you. You can in fact work out a deal where you only have to pay back so much of what you owe. In some cases, you can get away with paying pennies on the dollar. After you have paid the IRS to a point, you just complete the payment plan by paying the remaining balance you owe. In many cases, people have set up an installment agreement where they made monthly payments to these back taxes until they made their final payment.

Whether you know this or not, by failing to pay your back payroll taxes, your tax liability can become your personal liability. This is because if you fail to pay your payroll taxes on time, can result in what the IRS calls a "Trust Fund Recovery Penalty." This means you may just incur a debt for the business you run or are a part of.

The best advice is to seek a tax advisor, tax attorney, enrolled agent, or tax specialist to help you with your back payroll tax problem. You can find these companies online. They can guide you as to what is best to do in your situation. They may even contact the IRS in your behalf and negotiate your Offer in Compromise settlement. If they are successful, you may end up paying less or none at all.

The main consideration is to get your back payroll taxes paid so you can stop the penalties and get out of further trouble. Paying back in installments is the best way to go. It keeps the IRS off your back. Just don't forget to make a payment, or they may cancel your installment agreement. Then you'll be responsible for paying the whole bill at once including penalties.

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