Payroll Tax Problem
The IRS puts major emphasis on the timely payment of payroll taxes. If you have a payroll tax problem, you must deal with it immediately. Here’s the scoop.
Payroll Tax Problem
When a business has employees, it must pay payroll taxes. The IRS views these taxes as partially a payment by the employee since part of the tax payment comes out of the paycheck of each employment. If a business fails to make a payroll tax payment on time, the IRS more or less views it as a theft of the taxes taken from the employment check. In such a situation, the IRS reacts with a very aggressive and punitive course of action. Frankly, it is the stuff of nightmares.
The first step the IRS will typically take is to pursue a payroll tax lien. The lien is a nightmare because it carries with it something known as the 100 percent penalty. Essentially, the IRS will figure out the amount of payroll tax and assess a penalty equal to 100 percent of this amount. If you owe payroll tax in the amount of $20,000, the penalty will be $20,000. Yes, your payroll tax problem will have turned into a $40,000 nightmare.
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The next step taken by the IRS is typically collection of the amount due. If the IRS gets to this point, you run a significant risk of losing the business. Agents will physically come to your business and seize all assets in an effort to satisfy the amount due. It is ugly and a business killer. As if all that isn’t enough, it gets worse.
A payroll tax problem leads to payroll tax liability and there is no worse liability. With payroll tax liability, the individuals in charge of collecting, managing and depositing payroll are PERSONALLY LIABLE for the debt. This personal liability penetrates any corporate business structure. Put another way, it doesn’t matter if the business is a corporation, LLC or whatever. You will get no protection from personal liability. Again, it is the stuff of nightmares.
If you have a payroll tax problem, you need to act immediately. Procrastinating will not cut it. You must immediately get your CPA involved or a tax profession. Your business and personal finances may be riding on it.