Owing back payroll taxes puts you and your business in a complex situation with the IRS. Instead of hiding away from your debts, you can deal with this duty efficiently and in a timely manner by using any of the ways to resolve unfiled payroll taxes.
The Likely Effects of Unpaid Payroll Taxes
Unpaid payroll taxes are usually not treated likely by the IRS. The agency will make every attempt to collect what you owe even if it requires taking legal actions against you or your business.
When you do not settle your back payroll taxes, it is seen as a punishable offence and you could be jailed by the IRS. The IRS can also fine you heavily, including an evaluation of penalties up to 33 percent of your debt..
In the worst-case condition, you might lose your business totally. The IRS may close it down and sell it off to pay back the payroll taxes that you owe. That is how serious this could get.
Recognize That Some Businesses Deal with Tax Delinquency
It is also significant for you to realize that tax delinquencies occur to the best of business owners. It may not even be your error. A vendor or client might have gone out of business without remitting his or her invoices.
You in turn must pay your regular business expenses. You have nothing left with which to pay your payroll taxes. Even so, the IRS still requires you to pay on this tax obligation on time and without fail.
Take Action Immediately
Immediately you discover you owe back payroll taxes, you should take the necessary action immediately. Avoiding this obligation or ignoring it altogether will only make issues complicated.
The IRS could close your business, put you in jail, and examine your employees. You should make use of the available options like an installment agreement to settle what you owe and save your business. You should also get in touch with a tax resolution specialist who can assist you keep your business running while you pay off your back-payroll taxes.
Get Updated on Your Past Returns
You can get updated on your past tax returns by filing the most current one first. After you file the most current return, you should work your way and file the rest of the past returns. You should do this even if you are not buoyant enough to pay what you owe.
If possible, you should preserve money to pay your most current return’s amount first. You can then make payments on the rest, showing the IRS that you are serious about getting involved with your back-payroll taxes.
Do not Contact the IRS on Your Own
It is really not advisable to talk to the IRS on your own. The agent on the opposing end could lead you to implicate yourself. He or she may ask implicating questions about your employees, its function, and other relevant details.
Instead, you should hire a tax resolution professional to get in touch with the IRS on your behalf. This tax expert will know what information to let out and will avoid implicating you for something you did not do or for which you are not responsible.
Seek the Assistance of a Tax Specialist
A tax specialist can be an indispensable ally when it comes to resolving your back-payroll taxes. This Specialist can defend you from IRS collections. He or she can also counsel you on the various tax relief programs that are accessible to you.
For instance, your tax resolution specialist might advise you to opt for an Offer in Compromise, which could get rid of your entire tax debt. You also could demand a penalty abatement, which could eliminate the penalties and interests on your tax obligation.
Make Any Current Payroll Tax Deposits
You are encouraged to make any current payroll tax deposits when striving to solve your back-payroll taxes. You should take care of your current payroll deposits first before you start any negotiations with the IRS.
This step aid you avoid getting any further behind with what you owe. You must pay the current payroll tax deposits if you want the IRS to discuss with you about resolving the delinquent tax obligation.
File Form 433-B
You also will be required to file Form 433-B. This form allows you to give a detailed description about your business to the IRS. It discloses your business:
- Income
- Assets
- Expenses
Debts
It must be submitted to the IRS before you can negotiate on the balance of what you owe in back payroll taxes. The form will be used by the IRS to determine the amount you can afford to pay on the debt every month.
Provide All Necessary Documentation
The IRS will also maintain that you make all the necessary documentation before it will negotiate on the amount you owe. The documentation it may ask for includes:
- Bank statements
- Copies of your business’s monthly bills
- Accounts receivable aging reports
- Year-to-date profit and loss statements
- Recent payroll summaries
- Proof of federal tax deposit statements
These documents will be used to confirm how much your business earns and spends and what it can be able to pay on the obligation each month.
Request an Installment Agreement in Writing
If you want the IRS to set you up on an installment agreement, it is important that you make this request in writing. When making the written request, you should include how much you believe you can pay each month. The amount must be reasonable and in order with what your business earns.
You should also mention the date and the amount for the applicable tax year. These details are very vital especially when you may change or dispute something later. It also prevents the request being mixed up with another tax year.
Follow the IRS Deadlines
As soon as the IRS sets deadlines for completing returns, submitting documentation and other matters, it is critical that you do not disregard these dates. Failing to act in accordance with the deadlines could put your business in jeopardy of being shuttered and you being put in jail or heavily fined.
You also could have your business’s assets frozen or garnished. To safeguard valuables like company equipment or accounts receivable, you should work with the deadlines the IRS gives to you.
Know Your Rights and Options as a Taxpayer
As a taxpayer, you have certain rights even if you owe the IRS money. By law, you must be notified about the tax resolution options available to you.
You also have the right to hire a tax expert whenever you are dealing with the IRS. A tax resolution specialist has the required skill and training to act as your liaison between you and the IRS.
These strategies may help you resolve your back-payroll tax issues satisfactorily. They give you the chance to file back tax returns. You also can pay on what you owe through an installment agreement or Offer in Compromise. You can decide what options are suitable for you and learn more about your taxpayer rights by hiring a tax resolution professional to assist you today.