IRS Collections and Representation

Payroll Tax and 941 Problems

Unpaid payroll tax is the most dangerous balance a business can carry. The IRS treats it differently from income tax because the money was withheld from employees and held in trust. Enforcement moves faster, penalties stack quickly, and the exposure reaches the owner personally.

Also called: payroll tax problems, 941 problems, unpaid employment taxes, behind on payroll taxes.

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Why this escalates faster than other tax debt

Deposit penalties apply on a sliding scale that gets worse the later the deposit is, and they apply per deposit rather than per year. A business that falls a couple of quarters behind can find penalties have added a substantial amount to the balance before anyone from the IRS has picked up the phone.

Beyond the money, the IRS has tools it uses rarely on other debts and readily on this one, including levying receivables, contacting your customers, and in serious cases seeking to stop the business operating while it continues to accrue new liability.

The personal exposure behind the business balance

Running alongside the company debt is the trust fund recovery penalty, which can make owners and officers personally liable for the withheld portion. That is why a payroll case is really two cases, and why a resolution that fixes the company balance while ignoring the personal exposure is only half a job.

The first practical step is almost always the same. Get current on deposits going forward, even if the historic balance cannot be touched yet. The IRS will not put a lasting arrangement in place for a business that is still falling further behind.

This is likely relevant to you if

Your business is behind on 941 deposits or filings
You received notices about unpaid employment tax
A revenue officer has been assigned to your business
You are worried about being held personally responsible for the withheld portion

Professionals who handle Payroll Tax and 941 Problems

Certified Taxpayer Representative^™ holders are listed first, then by membership level. Every listing is a licensed professional reviewed by hand before it appears.

CTR^™Certified Taxpayer Representative^™, Verified

Dan Henn, CPA, CTR™

Daniel Henn, CPA, PA

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Rockledge, FL

IRS Power of Attorney Representation (Form 2848)
Installment Agreement Negotiation
Currently Not Collectible Status
+27 more

Aims to reply within 24 to 48 hours

Accepting clients

National

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Common questions

Can the IRS shut my business down?

In serious cases involving continuing non compliance, the IRS can seek action that effectively stops the business operating. It is not the usual outcome, and it is far more likely where the business keeps accruing new liability.

Can payroll tax debt be settled?

Employment tax balances can be resolved through payment arrangements and, in some circumstances, an Offer in Compromise. The trust fund portion is treated more strictly than other tax debt.

What should I do first?

Get current on the deposits due now. Historic balances can be negotiated, but the IRS will not agree a resolution for a business that is still adding to the problem each quarter.

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This page is general information about how the IRS handles this kind of matter. It is not advice about your situation, and no outcome is being promised. Results depend on your own facts. Speak to a licensed professional before you act. The directory is a free member benefit of Tax Resolution Academy^®, and there is no way to pay for a higher position in it.