Everyone knows it is best to pay your payroll taxes on time to avoid penalties and interest, however if you find yourself behind paying as soon as possible can assist you in avoiding unwanted additional fees. The goal should be to contact the IRS, or a tax professional as quickly as possible to discuss your options. Doing nothing is the most common and biggest mistake you can make.
Small businesses who qualify may be able to make monthly payments via installment agreement. Though interest and penalties may continue to accrue, an installment agreement may be your best option. In addition, if you’re small business is behind on payroll taxes, your company may qualify for an In-Business Trust Fund Express Installment Agreement. These agreements allow you to make monthly payments while avoiding the hassle of providing volumes of financial information. Also, since these agreements involve taxes withheld from your employee’s paychecks the IRS may implement additional procedures to ensure the ability to make Trust Fund Recovery Penalty assessments (TFRP). These assessments can be made against individuals within your business who carry the responsibility of paying payroll taxes, and have demonstrated an unwillingness to do so in a timely manner.
To qualify for an IBTF-Express IA, the tax debt must be $25,000 or less at the time the agreement is established. If more than $25,000 is owed, you can first pay down the liability to $25,000 or less in order to qualify, the debt must be paid in full within 24-months or prior to the collection statute expiration date, whichever is earlier, a direct debit installment agreement must be used if the amount owed is between $10,000 and $25,000, and all required returns must be filed and your business must be up to date with all payroll taxes for the current quarter.
Should you need assistance, please contact Advantage Tax Services, Inc. (404) 736-6084 and you will be connected with a licensed tax professional that will answer your questions and provide assistance with your tax issue.
Kenyatta Patton, EA, MAMF