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Posted On May 24, 2021
Behind on Payroll Taxes?

Behind on Payroll Taxes?

A business falling behind on payroll taxes can have significant consequences, such as the imprisonment of the owner, fines of up to 33% of the unpaid balances, and the business being shut down and sold off by the IRS to collect the unpaid payroll taxes. The IRS goes to great lengths to collect the payroll taxes owed to it. It is critical for business owners to learn how to resolve this tax issue to protect one’s business.

Resolving Unfiled Payroll Taxes

When a person realizes that he or she owes back payroll taxes, he or she should take action right away and create a workable plan to solve the problem. Ignoring the issue may allow the IRS to move quickly and make things worse. 

Getting Current on Past Returns

A person should file his or her current tax return first, then work backward to file the rest of the past returns. The taxpayer should set money aside to first pay the most current return amount. The person can then make the rest of the payments. This helps to show the IRS that the taxpayer is making serious attempts to get current on back-payroll taxes.

Making Current Deposits

It is advisable for a person to make current payroll tax deposits on time. This prevents the person from getting further behind and enables negotiations with the IRS.

Completing Form 433-B

The IRS uses Form 433-B to determine how businesses can satisfy outstanding tax liabilities based on their current financial information. Submitting the form is a requirement prior to negotiating on what one owes in back payroll taxes. Some of the details the form discloses about businesses include:

  • Income
  • Debts
  • Assets
  • Expenses

Providing the Necessary Documentation

The IRS insists on providing the necessary documentation before negotiations. This can include bank statements, payroll summaries, and copies of monthly bills.

Setting up an Installment Agreement

When a taxpayer wants to set up an installment agreement, it is best for him or her to make a written request. The request should indicate how much one believes he or she can pay every month as well as the date and amount for the particular tax year.

Following IRS Deadlines

It is crucial for taxpayers to abide by IRS deadlines. Not complying with the deadlines can result in severe consequences, such as heavy fines, imprisonment, and a person having the IRS shutter his or her business or garnish or freeze business assets.