Payroll Tax Problems and Your Small Business

The Internal Revenue Service has been cracking down on payroll tax compliance. If you own a small business it is important to you to avoid an IRS audit and the resulting penalties if you are found non-compliant with payroll tax regulations.

o The IRS recently marked small business as the biggest target for tax compliance enforcement. Small business is particularly being targeted for compliance with payroll tax regulations.

o When it comes to payroll tax enforcement, the Internal Revenue Officer has the power to seize your business and put you behind bars. The Internal Revenue Service’s power in the enforcement of payroll tax collection is unyielding. They can padlock your business, seize your equipment, and even intercept payments due you by customers. You cannot ignore payroll tax issues, or you are going out of business.

o The IRS can charge you with failure to file, deposit, or pay your payroll taxes. Penalties of 33% can apply just 16 days after the due date. Penalties and interest grow even more rapidly from there. You can soon find yourself so bogged down in tax payments, penalties, and fines that you are forced out of business. It does not matter how your business is structured, as an LLC, Limited partnership, General Partnership, Incorporation, whatever structure you have is ultimately vulnerable to the tax man.

o You can go to federal prison for not filing or paying your payroll taxes. The threshold to prove that you intentionally avoided filing and/or paying is very low. Chances are, if your case is referred to the IRS Criminal Division for investigation and on to the Justice department for prosecution, you are going to lose.

o Borrowing from your employees’ withholding is a crime. Usually, you must pay your federal payroll tax within 3 days of cutting payroll.

o The IRS can reach within the corporate skin and come after individual shareholders and business owners to collect their money. No business or principal of any business is immune.

o If you are in trouble with the IRS over payroll taxes, you need help immediately. You should either contact a tax attorney or enlist the services of a tax resolution firm.

You can hire a team of specialists, many of them former Internal Revenue Service agents, to help you resolve your payroll tax problem. These organizations are often coupled with CPAs and they will quickly attempt to stop the collection enforcement and make settlement with the Internal Revenue Service.

Contacting the Internal Revenue Service directly is not recommended. After all, they do not have your best interests at heart. They are considering the best interests of the federal government and their personal career aspirations. They are not likely to work out the settlement in your favor; they are more inclined to work out the settlement in favor of the federal government.

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