Sometimes businesses can't pay their bills.

When money is tight, businesses often fail to pay their taxes. These taxes are called "trust" fund taxes. This means that you are holding the money for the government. You are a "Trustee".  The following are some examples:

• Didn’t file Form 941 tax returns for various quarters.

• Didn’t file Form 940 tax returns for various years.

• Did file the required IRS payroll tax returns, but didn’t have the money to pay the tax.

Failure to file payroll tax returns or to pay payroll taxes usually come about because of one or more of the following reasons:

• Low business profits causes the employer to spend the money set aside for taxes.

• Low business profits cause the employer not to set aside enough money for taxes.

• Poor bookkeeping causes the employer to accidentally spend the tax money.

• A spouse, or a business associate, either runs off with the tax money or doesn’t pay it to the IRS on time.

• The employer intentional tries to hide or avoid paying the payroll tax.

Not only is the business liable, but you are too.

If the business fails to pay the taxes, not only is the business liable, but the owners and officers are often PERSONALLY liable for the business taxes.

The IRS can force a business to shut down which can't pay its taxes.

The IRS does NOT like it when a business is not paying its taxes. They attempt to move quickly and forcefully. Don't risk losing your business and your own money. Payroll taxes are an especially sensitive area for the government, and they will prosecute to the fullest extent of the law.  The IRS puts a lot of pressure on business owners to pay past due payroll taxes.

     The IRS’ attitude toward you goes something like this:

• There is NEVER any circumstance in life that should keep you from paying your payroll taxes.
  

• If you owe payroll taxes you are probably untrustworthy at best, and a scoundrel at worst.
  

• You may actually be a thief. Why? Because you have used, and owe, money that belonged to your employee, not to you.
  

Caution!  They may try to put you out of business. By causing you to shut your business’ doors for good, they believe they are doing you, and the IRS, a favor. Why? Because they are helping you not owe any more payroll taxes that you can’t pay on time.

They will use ALL the weapons in their arsenal to collect the money you owe them, including seizing business and personal assets. Be very aware that they don’t care about what happens to you or your business, just as long as they get their money.

Laws, written to greatly favor the IRS, prevent you from filing bankruptcy against payroll taxes. This means that you can’t get rid of payroll taxes simply by filing bankruptcy.

Special IRS Rules for Settling Payroll Taxes

Special IRS rules apply if a client wants to file an Offer in Compromise on payroll taxes. An Offer in Compromise is when you pay less than you owe to settle your tax debt. Sometimes you can settle for a lot less than you owe, and the IRS still considers it “paid in full”.

• You must be current with your Form 941 payroll tax payments for at least two quarters before the Offer is filed.
  

• You should have filed your most recent tax year’s Form 941 tax return.
  

• You should have filed your most recent Form 1040 for the most recent tax year.
  

They prefer that the business be completely shut down if there is a history of not paying payroll taxes and not filing tax returns. While this is not a true legal requirement, clients should realize that, if possible, it may be very beneficial to close the business while the Offer is being negotiated with the IRS.

After an Offer has been accepted by the IRS, you must file all required tax returns and pay All required taxes, for at least five years. If you don’t then the Offer will be revoked and the IRS will begin collecting the entire tax amount originally due, PLUS interest and penalties.

The Stress of Dealing with the IRS 

Owing tax to the IRS is very stressful, but business owners who owe payroll taxes face even greater stresses. These additional stress factors include:

• Having to operate your own business and raise money to pay the back taxes.
  

• Having to juggle paying business and personal expenses with potentially decreased money.
  

• Having to pay current payroll tax and file the tax returns - on time, every time.
  

• Pressure from very aggressive IRS collection folks, who don’t understand how tough it is to run a business
  

• Perhaps the greatest stress of all for some is the stress of trying to keep your marriage from falling apart due to these extra stresses.
  

Solving Your IRS Problems

We attempt to stop any IRS collection action, such as garnishments or liens on any business or personal assets.

We may set up an Installment Agreement, which is an IRS monthly payment plan. We may do this even if we are going to settle with the IRS for a smaller amount of money by filing an Offer in Compromise, which is an IRS settlement offer.

We must become very well-acquainted with your financial facts so we can determine if you are a good candidate for an  Offer in Compromise.    An Offer is where you settle with the IRS for less than the amount of taxes you owe, sometimes much less.

Are You Serious About Solving Your Tax Problems?

The best way to deal with a payroll tax problem is to NOT ignore it.  Unpaid taxes don’t get better just because you put them into a dark closet. You must:

• Have the courage to face up to your problem.
  

• Deal with your problem sooner, rather than later.
  

• Try to develop a workable plan to deal with your problem, both now and in the future
  

• Hire a tax professional who will be an emotional buffer between you and the IRS, so that you never have to talk or meet with the IRS.