Owe Back IRS Payroll Taxes – How to Get a IRS Payment Agreement, Former IRS Collection Agent
I am a Former IRS Revenue Officer and have worked thousands of cases since 1973.
Our firm is comprised of true IRS tax experts for those wishing professional and affordable services for dealing in any type of IRS problems including the settlement of IRS Payroll. Taxes.
How to deal with the IRS to get a payment agreement
When you are handling back IRS payroll tax issues there are certain things you can do to ensure your payment agreement gets accepted by the Internal Revenue Service.
Like anything else there is a system to what the Internal Revenue Service does and how they work there cases.
We can make sure you get a very reasonable IRS payment agreement.
Being Former IRS Agents and Managers we know the system.
Suggestions to heed
- Start making your current payroll tax deposits time on time:
IRS may not let you to enter into any payment arrangements for back payroll taxes until you are making your current tax deposits on time.
This is because the IRS wants to ensure that paying your back payroll taxes and this will not be a problem in the future.
Those who cannot stay current usually cannot make back payments.
As a former IRS instructor I taught new IRS Agents never to accept payment plans to those businesses who could not stay current on payroll taxes.
File all back unfiled 941 Tax Returns:
If you have any tax returns that have not been filed and are past due or late, you MUST file these back tax returns before the IRS will even consider any payment agreement to resolve your tax bill.
So, it is wise to file all back tax returns and make a current FTD’s as soon as possible.
The IRS will require your business to complete a full financial statement disclosing all of the assets, liabilities, income, and expenses of the company.
They use this financial statement to determine what kind of monthly payment they will require from you.
The IRS will pay a real close attention to your equity in your assets and also your current income statement over the last 3 to 6 months.
The Internal Revenue Service will attempt to collect as much as they possibly can on a monthly basis based on your income statement.
Being a former IRS agent I can tell you it is very critical that you use a true tax professional to handle the filling out of the financial statement and the income statements so Internal Revenue Service cannot than they should on a monthly basis leaving you with no cash flow.
Why is IRS tough on payroll taxes?
It is not a tax, just money held in trust, basicly the money is not yours.
And most importantly you must take into consideration the Trust Fund Recovery Penalty.
The IRS Trust Fund Penalty – The 6672 Penalty
Most individuals are very surprised that the IRS has the right to collect the trust fund recovery penalty (TFRP) against individuals of corporations who failed to pay their payroll taxes.
The penalties are set up to encourage prompt payment of withheld income and employment taxes, including social security taxes, railroad retirement taxes or collected excise taxes.
Congress passed a law that provides for the so called trust fund taxes.
These taxes are called trust fund taxes because you actually hold the employee’s money in trust until you make a federal tax deposit in that amount. The (TFRP) may apply to you if these unpaid trust fund taxes cannot be immediately collected from the business. The business does not have to have stopped operating in order for the TFRP to be assessed.
Who Can Be Responsible for the Trust Fund Taxes, code section 6672
The trust fund recovery penalty may be assessed against any person who:
- Is responsible for collecting or paying withheld income and employment taxes, or for paying collected excise taxes; and
- Willfully fails to collect or pay them
A responsible person is a person or group of people who has the duty to perform and the power to direct the collecting, accounting, and paying of trust fund taxes.
This person may be or had some of the following powers:
- An officer or an employee of a corporation;
- A member or employee of a partnership;
- A corporate director or shareholder or member;
- A member of a board of trustees of a nonprofit organization, or anyone deemed to be responsible;
- Another person with authority and control over funds to direct their disbursement.
For willfulness to exist, the responsible person:
- Must have been, or should have been, aware of the outstanding taxes; and
- Either intentionally disregarded the law or was plainly indifferent to its requirements (no fraudulent intent or bad motive is required).
Using available funds to pay other creditors when the business is unable to pay the employment taxes is an indication of willfulness.
IRS will usually ask for a 4180 Interview
You may be asked to complete an interview in order to determine the full scope of your duties and responsibilities.
This will be on form 4180 that you can find on our website.
The Internal Revenue Service does not set up the trust fund recovery penalty on all companies that own back payroll taxes it picks and chooses depending on the dollar amount and the type of case they are working.
We have over 206 years of professional tax experience and over 60 years of working directly for the Internal Revenue Service. We are also a full service tax firm.
Owe Back IRS Payroll Taxes – How to Get a IRS Payment Agreement, Former IRS Collection Agent