The IRS views failing to pay payroll taxes as the cardinal sin of tax delinquency because a large portion of the payroll taxes are your employees’ withholdings. Not paying your company’s payroll taxes is tantamount to stealing your employees’ money in the eyes of the IRS.
As a result, penalties for failing to pay your payroll taxes and filing your payroll tax returns on time are much more severe than income tax penalties. They can drastically multiply the amount you owe in a very short time.
If you tax liability is over $100,000, legal prosecution as a felony and jail time are not off the table.
If you are behind on paying payroll taxes for your company, WATCH OUT!!! The IRS is extremely aggressive pursuing collection of this type of tax. They would rather seize your business assets, close you down, sell your assets at auction, and put you out of business than allow you to continue amassing additional payroll tax liabilities.
If you are behind on your payroll taxes, DO NOT meet with the IRS on your own. I will give you a real life example of what occurred with one of my clients. The taxpayer had a long-term failure to pay his payroll taxes, and worse had contracted with other firms to handle the payroll tax debt problem in the past, and not followed through. Whether it was the taxpayer’s fault, the former Representative he hired, or both is irrelevant. The fact is it had not been handled and the IRS was not in a friendly mood. They had already given all the time to handle they felt they should.
Fortunately, his liability was “only” $90,000. The Tax Attorney we use at Torchlight Tax said the IRS has an internal rule of not referring to the Department of Justice for prosecution for payroll tax liabilities of less than $100,000. Most of those referred and prosecuted are found guilty and do jail time.
As he owed less than $100,000, we were not worried about prosecution. A Revenue Officer had already levied his bank accounts twice. The first time was long before we had met the client. The second time was just as we were coming on as his IRS Representative. We were able to get most of the second levy back as needed for current payroll.
The Revenue Officer went to visit the client. He was very friendly and wanted to “work things out”. The client thought it would be a good idea to work with him. I said ‘No!”. The Revenue Officer wanted to visit his place of work, review his client files, inventory his equipment, and interview him. The revenue officer had already issued garnishment orders to a couple of his customers.
These were customers the taxpayer was servicing monthly. Rather than pay my client, the customers were ordered to pay the IRS instead. Had the Revenue Officer gotten his hands on the taxpayer’s complete customer list, he could have garnished all his customers and with no current income, the taxpayer’s business would have failed. The taxpayer did owe $90,000 in back payroll tax and his staff were currently servicing these same customers. If his clients were paying the IRS, then he would have had no income to pay his staff. His assets would have been sold in an IRS Auction. Then he would have had to start over and most of the debt would have still been there. The IRS did not care. He had failed to pay his payroll taxes and they were going to get whatever money they could out of his business.
With Collections temporarily off his back, the taxpayer got to work. He had received his wake-up call and re-organized his business. He got rid of employees who were not carrying their weight. Nine months later, the OIC Unit of the IRS contacted me and asked for the taxpayer’s current bank statements. I contacted the taxpayer. He had made his business productive in the last nine months and had over $90,000 dollars in his bank accounts. We withdrew the Offer in Compromise, and the taxpayer wrote a check to the IRS.
He now has a profitable business and is paying all his taxes. Had his business not expanded when he re-organized, we probably would have gotten the OIC approved for around $7,000. The main thing is that the OIC gave him time to re-organize the business and make a profit to pay off the IRS.
At Torchlight Tax we are very familiar with negotiating payroll tax debt with the IRS. It is a high stakes game because of the potential for criminal prosecution. We have a former District Attorney who is also a Tax Attorney who works for us. It is possible in some cases to safely settle even larger tax debts than 100K. It is very important that you get IRS Representation if you have payroll tax debts as soon as possible. The IRS will work with us if we start to work before they have lost patience and they see we are working to resolve the situation. They are much less accommodating when they have already been trying to collect for some time.
If you have payroll tax debt, do not delay, or try to handle it on your own. Do not use a one-man tax office or one of the big tax franchise mills. You need a tax and accounting firm experienced in this sort of thing.
If you have a large payroll tax debt, you are already in trouble. How the initial IRS questions are answered can determine whether you stay in business or not. It is critical you hire a Professional Tax and Accounting Firm in Las Vegas familiar with the ins and outs of payroll tax debt negotiation.
Payroll tax debt can be handled just like any other tax debt. Your Representative needs to be a bit more on the ball, however, because there is increased risk.
Call us at 1-877-758-7797 or 702-463-1818 or email us at info@TorchlightTax.com. We can transfer your call to a branch office near you or help you directly from our central office. Free consultations are available.
Many people do not know how a professional tax and accounting firm differs from a bookkeeper or tax preparer. The main difference when working with a professional tax and accounting firm, such as Torchlight Tax, is that our firm utilizes the services of CPAs, EAs, and Attorneys who are distinguished from bookkeepers and other tax preparers by stringent qualification and licensing requirements. Our entire team has a purpose to legally save your tax dollars and to make taxes as painless as possible. This means we take your calls and respond to your concerns. If you receive a threatening IRS call or Notice or are worried about some tax question, we are here for year round taking your calls and responding to your emails.
Whether you are filing personal, small business, or corporate taxes, or negotiating IRS tax debt, if you are not already using a professional Tax, Accounting and IRS Representation firm, you most likely have missed out on major tax benefits. This is because a professional tax and accounting firm utilizes licensed professionals such as Certified Public Accountants (CPAs), EAs and Attorneys, who can not only advise individuals on personal financial matters but who can also advise businesses and corporations of all sizes and types. Tax laws are complicated, and no one knows everything. Torchlight Tax is a team and any one of our tax pros can call on other EAs, CPAs and Tax Attorneys in the team who may have specialist knowledge in a specific area of tax.
When doing current taxes, we often come across missed tax savings from prior years. When this happens, the Internal Revenue Service allows you to amend your taxes and lower your tax liability. Whether you or your prior tax preparer missed a W-2 or 1099, a revised 1099. large charitable donations, or made some other error, amending your tax return can help you recover the money you are rightfully owed. When we find this situation, we will advise you on potential savings and amend the previously filed tax return.</p”>
Sometimes, there may be a situation where a tax return could be amended, but it is too late to receive any benefit. Or maybe you made an error that was missed by the IRS that would have increased your tax liability. In some cases, it is prudent to file an amended return. But if it is not necessary and will not save you any money or decrease your risk, we will tell you not to bother. It is silly to amend a return to no advantage which is too old for the IRS to audit. Some firms might file a bunch of unnecessary tax returns and charge a fee. Sometimes a taxpayer himself might increase his tax liability by filing an unnecessary amendment that increases his tax liability. We will not do this.
Amending a tax return requires more professional acumen then doing it right in the first place. At Torchlight Tax, we do file the tax return correctly the first time. And we will happily amend your tax return, but only if it actually is to your benefit. If you think you might need to amend tax returns, contact Torchlight Tax for a free consultation.