Owe Back Payroll Taxes?

Employer's are required to withhold payroll taxes from their employees paychecks and pay this tax to the IRS on their employees' behalf. At the end of each calendar quarter, employer's are required to file the form 941 Employer's Quarterly Tax Return which reports to the IRS the amount of wages paid to their employees, the amount of withholding for the total amount of wages paid as well as social security and medicare withholding taxes. Also, at the end of each calendar year the employer is required to file the form 940 Employer's Annual Unemployment Tax Return which reports the amount of unemployment tax that was collected for the previous calendar year. Of all of the taxes that are owed to the IRS due to non-payment, payroll taxes are the worse type to owe. Payroll taxes for all intents and purposes are a trust fund tax. The employer acts, if you will, as an agent of the government. The IRS is aggressive in collection of past due payroll taxes. If the employer in unable to pay what is owed, then the IRS will begin enforced collection action to collect what is owed. This can result in levy of the employer's bank account, an immediate filing of a federal tax lien, levy of the employer's accounts receivables and seizure of the companies assets. If the IRS is still unable to pay what is owed after taking enforcement action against the employer and their assets, the IRS will then pursue what is called the Trust Fund Recovery Penalty. What this means is that the IRS can assess against those individuals deemed responsible for not paying over the payroll taxes, an amount that is equal to the withholding tax and one half of the social security tax for each quarter that was not paid. Among those who can have this assessment made against them are any corporate officer, anyone who shows that they were both willfull and responsible for not paying these taxes, ie: a bookkeeper, accountant, etc. To help make this determination, the IRS will summons the corporate bank records to see who was writing and signing corporate checks, check UCC filings, interview all potential responsible parties to name a few. Who had a fiduciary responsibility to pay the payroll tax? Many times in our experience as Revenue Officer's we had a corporate officer claim that they had nothing to do with payroll or attempted to absolve themselves due to sheer ignorance. Unfortunately for them, these were not valid arguments. Of course taxpayer's are afforded their appeal rights for any potential assessment against them. At Tax Advocacy, LLC we are well versed in all aspects of resolving the back payroll tax issues.

A 941/940 tax debt can cause serious problems for an operating business. Don't leave your back tax issues to chance. Contact us at http://www.taxadvocacyllc.com/ for additional information.