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Back Payroll Taxes

We Can Help with Overdue Payroll Taxes

The IRS is the most aggressive when it comes to collecting back payroll taxes from businesses. This is because payroll taxes are a special kind of tax -- a trust fund tax -- where your company collected a tax on behalf of the government by withholding from paychecks, but then did not turn over that tax to the government.

In the eyes of the IRS, you essentially have stolen from the government by not turning over those taxes once you had collected them.

How Can I Resolve Back Payroll Taxes?

Like any resolution with the IRS, resolving back payroll taxes means that your company needs to get a formal resolution in place such as a payment plan, an offer in compromise, or have your accounts placed into currently not collectible status.

By establishing a formal resolution, you ensure that the IRS will not take aggressive action against your company to collect the taxes such as bank account levies, accounts receivable levies, and seizures of property.

What Do I Need To Do To Put a Formal Resolution Into Place?

Handling a back payroll issue is the same as any other tax issue on the surface. Before you can propose any kind of resolution with the IRS you must do the following:

Start Paying Your Current Tax Deposits on Time: you cannot enter into any arrangements with the IRS for back payroll taxes until you are making your current tax deposits on time. This is because the IRS wants to ensure that paying your taxes will not be a problem in the future.

This requirement is more difficult for businesses with Back payroll taxes because they are required to make a tax payment at least once per month, and sometimes several times a month. This gives companies multiple chances of failure to meet this requirement, compared to an individual who may just need to meet this requirement just once every year.
File All Missing Tax Returns: If you have any tax returns that have not been filed and that are past due, you must file these returns before the IRS can consider any arrangement to resolve your debt. The IRS forces you to do this to get you back into compliance and to ensure that any agreement they make with you covers all of your tax debt, not just a part of it.
Complete a Financial Statement: the IRS will require your business to complete a full financial statement disclosing all of the assets, liabilities, income, and expenses of the company. They use this financial statement to determine what kind of monthly payment they will require from you.

What Extra Considerations Are Unique to Back Payroll Taxes?

The most important consideration to take into account is the Trust Fund Recovery Penalty. If your business owes back payroll taxes and is incorporated or an LLC, the IRS can defeat your protection from personal liability and assess you personally with a portion of the back payroll taxes.

This portion is known as the "trust fund" portion of the debt, and it includes the amounts that were actually withheld from employee paychecks. It does not include any of the corporate matching taxes, or any of the penalty and interest that have been assessed to your company.

The IRS can pursue this personal assessment against any owner or employee of the company that made financial decisions for the company. If your company owes back payroll taxes, the IRS will almost always pursue a Trust Fund Recovery Penalty assessment against the owners too.

This means that if you are looking for help on your company's back payroll taxes, you should also expect that you are going to need help defending against this assessment and, if the assessment is made, working out a plan with the IRS for the owners of the company personally.