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Do You Need Payroll Tax Debt Relief?

Every year, many business owners find themselves in an unfavorable situation with the IRS due to their failure or inability to pay payroll taxes. This payroll tax debt can easily accumulate, causing business owners to feel overwhelmed and hopeless. In many cases, the stress of looming tax roll debt can cause employers to fall further and further behind on their outstanding payroll taxes. However, if you are struggling to pay your payroll taxes, it’s essential to take action as soon as possible.

If or when the IRS contacts you about overdue payroll taxes, it’s important to respond quickly. If you fail to respond to an IRS notice regarding outstanding payroll taxes, it will only worsen your situation as penalties and interest accrue. At Morgan Sebastian Law, PC, our attorney can help employers and business owners who feel trapped by payroll tax debt. Our experienced attorney can represent you before the IRS, assist you with settling your tax debt and protect your interests. Here is some important information to know about payroll tax debt in California.

Payroll Tax Debt Relief

Businesses or employers that have overdue payroll taxes or failed to withhold taxes from their employees’ paychecks may need payroll tax debt relief. Whether the taxes weren’t paid because of a mistake or an inability to pay, you will still need to pay the IRS. If your payroll tax debt continues to go unpaid, the IRS may choose to levy your bank account. We can assist business owners struggling to pay their payroll taxes and explain the variety of repayment options that may be available.

Employers Must Withhold Payroll Taxes

By law, employers are required to withhold payroll taxes from their W-2 employees’ wages. These funds are considered ‘trust funds’ of the employee that must be paid to the IRS. Employers are considered fiduciaries for these employee-owned funds. All employers must file IRS Form 941 to pay both their portion along with their employees’ portion of payroll taxes to the IRS. Taxes that employers must pay include Social Security, Medicare, federal income taxes and unemployment tax.

It is important to note that in order to file and pay unemployment taxes for all of their employees, employers must file Form 940 in addition to Form 941. If for any reason, an employer fails to pay these payroll taxes, the IRS will add additional fines or penalties to their outstanding tax debt. The IRS has numerous methods to obtain repayment of payroll tax debt, including liens, levies and garnishments from business revenue.

What Happens If I Fail To Pay Payroll Taxes?

When it comes to an outstanding payroll tax, the IRS can be very aggressive in pursuing repayment. In fact, since failing to pay payroll taxes is technically stealing employee funds owed to the government, it can be treated by the IRS as a criminal offense. The Tax Code also allows the Service to proceed against any ‘responsible party’ within the business or corporation, disregarding the corporate entity and making the individual personally responsible for the taxes owed and penalties. When The IRS identifies a business that owes payroll tax, they will assign a revenue officer to the case. This revenue officer will either contact the business owner by mail or in-person to request payment. Business owners should be aware that unpaid payroll taxes can accumulate at a faster rate than regular income taxes. This means the resulting penalties and fines can quickly become enormous.

Additionally, if the IRS chooses to classify your unpaid payroll tax debt as ‘willful’ it can become a federal criminal offense. This is prosecuted by the Department of Justice, which can have a lasting impact on the health of your business, as you or members of your business could be subject to prison time if convicted. Ultimately, the best way to find relief from unpaid payroll tax debt is to consult a skilled tax resolution lawyer.

Choose Morgan Sebastian Law, PC, For Payroll Tax Debt Relief

If you are struggling to pay any outstanding payroll tax debt, it’s essential to act as soon as possible. At Morgan Sebastian Law, PC, we can help you respond to allegations of unpaid payroll taxes. To schedule a consultation with our experienced tax resolution lawyer, call our office in Orange at (877) 223-6605 or fill out our online contact form.