Unpaid Payroll Taxes
The IRS views unpaid payroll taxes as an emergency situation requiring their immediate, undivided attention. Unpaid payroll taxes and trust fund penalties can add up quickly and cause serious harm to your business and your personal livelihood. This probably isn’t what you wanted to hear when Googling your questions about unpaid payroll taxes. You may have been researching because you received a threatening notice and demand for immediate payment from the IRS that from a previous quarter or multiple quarters.
The proposed “remedy” from the IRS usually involves negotiating with a local Revenue Officer. As a business owner, if you do not quickly take action to resolve your payroll tax problems, the IRS can and will ruin your business as well as your personal financial life.
Here are some possible consequences that you can expect to deal with if you owe the IRS unpaid or unfiled payroll taxes:
- Threats to seize your professional and/or personal belongings.
- You could incur penalties of up to 15% for failure to deposit the payroll taxes quarterly, plus up to 25% for failure to file and failure to pay penalties quarterly.
- Interest is compounded daily on unpaid payroll taxes, penalties and interest.
- You could be held personally responsible for all unpaid employee withholding taxes, or “trust fund penalties” equaling 100% of the unpaid taxes, charged against you and any person in your company that is responsible for making the payments (yes, even your secretary if she is responsible for the tax payments, could personally have a tax problem for not making the IRS payments).
- Payroll taxes and trust fund penalties are not dischargeable in bankruptcy.
- Continuing failure to pay and file payroll taxes could lead to the IRS assigning a Revenue Officer to your case. Revenue Officers are local tax collectors that can, and will visit your home and/or business.
- You could be held criminally liable for failure to withhold or remit withheld payroll taxes. While rare, the IRS does pursue criminal penalties in extreme cases.
Where Do You Go From Here?
All of these consequences can seem entirely overwhelming, confusing, and down-right frustrating. And, if you’re not careful, the IRS can take advantage of you because of your lack of knowledge on what rights you have and options you qualify for. However, with a local team of tax resolution professionals on your side, your options and future look a lot brighter. We have a team of experienced Enrolled Agents ready to protect your rights and your business. Contact us today if you need assistance!
John King is a co-owner of U S Tax Solutions. He is an Enrolled Agent, NTPI Fellow and Tax Resolution Specialist. For more than thirty years, a recognized tax professional specializing in tax preparation and state tax representation. John is currently serving as a board member of the TN Chapter of National Association of Tax Professionals (NATP). John is a retired Art Teacher from Hamilton County Tennessee, BA World History and Art. When asked how a tax professional could ever teach art, John replied “you’ve got to be creative”.