The IRS requires employers to deduct a part of employees' wages as payroll taxes and contribute an equal amount. Failing to remit all the withheld money within the given deadline can land you and your company's finance department in trouble.
In most cases, the IRS will impose accruing penalties and tax lien. If declared guilty, the party liable for failing to remit collected amounts may also serve jail time or pay hefty fines.
It is crucial to clear the payroll tax you owe to avoid such issues. Here, we discuss how you can use various relief programs to repay the IRS and prevent business closure.
Dealing With Payroll Tax Debt
Once the IRS realizes that your business owes payroll taxes, they will assign your case to a revenue officer. This expert will then contact you by sending a notice requesting compliance with tax filing. In the document, they will indicate the reason for reaching out and the amount that you owe. They will also state the fines imposed and the likely consequences of failing to repay.
When you receive such a communication, it is essential to ensure that the details indicated are correct. Confirm that the amount due is the right one by comparing the document against your tax forms.
After that, respond to the revenue officer to acknowledge receipt of the notice. This measure will indicate cooperation and the willingness to clear your debt. If you cannot repay the amount due in full, contact a tax resolution expert to help you set up a payroll debt relief plan.
Negotiating Payroll Tax Debt Relief With the IRS
The IRS allows employers and business owners to negotiate payroll tax debt. In most cases, the agreed repayment method differs depending on the nature of the liability. It may also vary based on the party liable for not remitting the taxes.
One relief option the IRS provides is an installment payment agreement. This mainly involves clearing the total amount owed, including penalties, within a given period. During this time, the IRS will still impose penalties on due taxes and any late payment.
You must file all taxes for previous years and pay a processing fee to qualify for installment agreements. Besides, you should pick an appropriate plan depending on the amount owed and your ability to pay. Some of the options to consider are streamlined installment agreement and in-business trust fund.
If your business is still running, the IRS will only allow you to repay using an in-business trust fund. With this program, you can clear debts equal to or less than $25,000. Still, you must repay the total amount within 24 months or the provided collection statute expiration date (CSED).
On the other hand, if the IRS closed down your business due to debt, you can enter a streamlined installment agreement. This program will help you clear debt equal to or less than $25,000 within six years. Once your business qualifies for this plan, the IRS will not file a tax lien.
Benefits of Hiring an Expert for Payroll Tax Debt Resolution
When owing the IRS, it is crucial to consult a tax attorney before seeking debt relief. This can help you determine the best way to resolve the issue while considering your company's goal. They will also guide you in selecting a relief program that will not lead to significant financial straining.
Another benefit of consulting an expert is they can identify when your business is at risk of closure. This way, you can take precautions to avoid it and negotiate for favorable repayment terms.
Contact Tax Industry for Debt Relief
Working with a tax resolution expert allows your company to avoid the consequences of payroll tax debt. At Tax Industry, we have a team of experienced lawyers and CPAs to help you deal with the IRS. With their skills, you can negotiate for installment payments to prevent business closure and lawsuits. Contact us today to enroll for payroll tax debt relief.