Managing a Payroll Tax Delinquency

Failure to withhold and deposit payroll taxes can have serious consequences for employers and their employees alike. Employers may be subject to criminal and civil sanctions for willfully failing to deposit payroll taxes. Employees suffer because they may not qualify for social security, Medicare, or unemployment benefits when employers do not report or pay employment and unemployment taxes. The IRS is particularly hostile in their actions to collect on delinquent payroll taxes. They are not only limited to enforced actions against the assets of the business, but can also seek remuneration from directors, officers, owners, members, shareholders, and certain employees. The bottom line is anyone responsible for the collection or payment of withheld income and payroll taxes who willfully fails to collect or pay them can be held personally liable for the tax debt and face severe penalties and possible imprisonment.

Any individual or group of individuals determined responsible for the noncompliance of the business to meet its payroll tax obligations will be assessed a penalty by the IRS. The Trust Fund Recovery Penalty - aptly named because of its association to the trust fund tax - imposes a fine equal to the unpaid income taxes withheld, plus the employee's portion of the withheld FICA taxes. The IRS can assess the Trust Fund Recovery Penalty against any person or persons within the organization found to be responsible for, yet willfully negligent in the remittance of payroll taxes to the government.

In order to determine culpability, the IRS will first conduct an investigation during which you and other individuals within the organization may be asked to complete an interview to determine the full scope of your duties and responsibilities. If this investigation finds you willfullly responsibile in the failure to deposit payroll taxes, then the IRS can undertake collection actions that target your personal assets. After assessing the Trust Fund Recovery Penalty against you, the IRS can employ measures such as filing a federal tax lien against your property or taking levy or seizure action against your financial assets and other property. The IRS may even go so far as to close down your business, liquidate the company's assets, and apply the sales proceeds against the outstanding tax debt.

If you are currently facing IRS collection actions for back payroll taxes, you require immediate tax representation. Further delay will cause your penalties to increase and compel the IRS to take escalated measures to collect from you, which may include holding you personally liable for the tax debt, thus leaving you susceptible to civil and criminal sanctions.

Tax Muscle has remarkable proficiency in the resolution of delinquent payroll taxes and will negotiate with the IRS on your behalf to achieve a favorable outcome. The quicker we take action to establish a mutually acceptable agreement between you and the IRS, the better your chances that your business remains open and your real property and personal assets remain secure. Contact Tax Muscle now for help.