State Bar of California
Super Lawyers

Payroll Tax Problems

If your business has employees you are required to payroll taxes. Depending upon the size of your payroll you may be required to make tax deposits with the IRS as soon as the day after you pay your employees. If you fail to pay your payroll taxes on time then the IRS imposes interest and penalties. If you let things go too long the penalties and interest can be larger than the amount of the payroll taxes.

There are several ways that payroll tax problems arise. Sometimes a business is short on cash. If you don't pay your suppliers or your landlord you will be out of business very quickly. On the other hand the IRS moves slowly. It can be months and months before the IRS gets serious. Some business owners hope that by the time the IRS calls or visits they will have enough money to solve their payroll tax problems. Unfortunately that usually doesn't happen. Instead the payroll tax problems grows quarter after quarter, and interest and penalties keep accruing. By the time the IRS shows up things have gotten so bad that the IRS is threatening to shut down the business. In some circumstances the failure to pay payroll taxes can be a felony subject to punishment by imprisonment, or fine.

Another way that payroll tax problems arise is when incompetent or dishonest employees fail to pay the payroll tax debts, and hide their mistakes from the business owners. Although your business can not avoid payroll taxes entirely even if you have incompetent or dishonest employees, our tax litigation attorneys may be able to negotiate a settlement with the IRS to reduce the penalties and interest. Our tax lawyers may also be able to prevent the IRS from holding your personally responsible for these payroll tax debts. Most California businesses that have IRS payroll tax problems also have California State payroll tax problems. The rules governing California payroll tax problems are similar to IRS rules, but there are also many important differences.

Even though the IRS has many weapons you have rights, including the right to consult a tax lawyer, or tax attorney to help you obtain tax relief. As tax lawyers with IRS tax litigation experience we can help you resolve your payroll tax problems. Solutions for your payroll tax problem may include:

  • Submitting an Offers in Compromise to reduce your payroll tax debt
  • Obtaining a short-term deferral of your payroll tax debt so that you can have time to get back on your feet
  • Negotiating an Installment Payment Agreement so that you can pay your payroll tax debt over as long as 10 years or more
  • Reviewing your tax accounts to determine whether or not the IRS has correctly calculated your payroll taxes
  • Determining whether the time the IRS has for collecting your payroll tax debt has expired, or will expire soon
  • Negotiating releases of federal tax liens so that you obtain a loan to pay-off your taxes
  • Having your payroll tax debt declared currently uncollectible so you can have a tax holiday from your old payroll tax debts
  • Obtaining releases of payroll tax levies
  • Filing claims for interest and penalty abatement

Of course every case is different, and you need an experienced tax lawyer to advise you on the best solution for your situation.

Filing for bankruptcy will not solve your payroll tax problems. Even if your business is a corporation the IRS may be able to collect a portion of the payroll tax debt from the owners, officers, and sometimes even independent contractors and employees. This is known as the trust fund penalty, trust fund recovery penalty, 100% penalty, civil penalty, or Code Section 6672 penalty. Our tax lawyers can determine if you are liable for the trust fund recovery penalty. If we believe that you are not a responsible officer subject to the trust fund recovery penalty we can negotiate with the IRS revenue officers and IRS Appeals Officers to have them drop the trust fund penalty. If the IRS doesn't agree our tax attorneys are experienced tax litigators, and we can sue the IRS and represent you before a United States District Court judge.

We will also advise you about the best way to make any partial payments to the IRS in order to reduce your personal liability for the trust fund penalty. Many business owners make payments to the IRS of hundreds of thousands of dollars only to discovery later on that the payments haven't reduced the amount of their personal IRS payroll tax debt.

Call us today at 800.380.TAX LITIGATOR or contact us online.

Tax Problem Attorney Blog - Payroll Tax Problems
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