Delinquent Payroll Taxes can Hurt a Small Business

Wednesday, October 24, 2012

Payroll taxes can be a challenge for a small business, especially if they don’t have their own payroll specialists and someone like a manager or the owner is the one handling the payroll.  It can be easy to let this area slide and become disorganized when other more pressing issues arise.  However, payroll taxes should take a high priority for any business.

When a business becomes delinquent on their payroll taxes, the IRS will take steps to see that the debt is paid.  This can be devastating to a business and methods can include:

  • Audits
  • Levies – on property and financial accounts
  • Seizure of property – including the business and its products and assets
  • Criminal prosecution

When there is an IRS seizure of assets, the business can no longer do business.  The next step is criminal prosecution, which can ruin the life of a small business owner.  It is essential that a business avoid these issues by always paying its taxes on time and accurately.  When in doubt, they can contact an accountant or the IRS directly to answer questions about their payroll. 

There are several things a business can do to make sure they don’t have any issues with their payroll taxes.

1.  Keep up on the new payroll tax laws so that they know how much they have to pay.  You can visit the IRS website for updates and sign up for emails and alerts.

2.  Keep accurate, organized records of all payroll expenses and forms.

3.  Meet the minimum tax payment requirement on time.

4.  Provide the correct classification on all workers; this includes stating which ones are full or part-time and which ones are contractors as opposed to company employees.  Also fill out the correct forms for each type of employee.

5.  Understand the correct use of payroll trust accounts and don’t misuse it for other expenses.

If payroll taxes are too complicated and time-consuming for the business to handle on their own, they can contract the work with payroll and bookkeeping companies.  These companies understand the changing tax laws and keep updated on any changes relevant to that business.  They submit the proper payments and forms at the correct times so that business owners and managers do not have that responsibility.  They also assume responsibility for any mistakes that are made, which takes the pressure off the business owner.

If you are behind on your payroll taxes or have reached the stage where you are receiving notices of failure to pay, you need to work with an experienced tax professional to prevent the IRS seizure of assets.  The attorneys with Strategic Tax Lawyers understand payroll taxes and can work with the IRS to reach a resolution that protects your business and assets as well as prevents the further pursuit of criminal action.  They can explain the process to you and assist you in solving your tax debt.

IRS References

The IRS.gov official website can help you with more information.  Contact the IRS with a specific question about payroll taxes to get correct answers before you file, or search Google with a related keyword.  Get local information for assistance at the Beverly Hills Bar Association. Download these IRS forms and publications for more information.  The Department of Labor is a valuable resource for specific employment tax guidance.