Payroll Tax Problems are a common denominator in a large percentage of failed businesses. Either they are an initial driver of the cause of the business failure or a symptom of those problems. However, one thing is certain, once a company begins to experience payroll tax problems, it becomes very, very difficult to get out of the vicious circle and get the business back on track.
Why are Payroll Tax Problems Tough to Survive?
When a company begins to get behind, there are several factors that make it difficult to turn the problem around. Remember that the IRS prioritizes Payroll Tax Problems above normal Tax Debt due to the failure of the business to remit employees payroll withholdings held in trust. Some reasons why it becomes difficult to resolve Payroll Tax Debt for businesses include:
- The core problems (Cash Flow Problems) that created the problem often continue to exist. With continued cash flow problems, it is difficult for the company to turn the problem around.
- Penalties and Interest rapidly increase the amount owed. We’ll cover this in our next blog but penalties include Failure to File, Failure to Pay, and Failure to Deposit Penalties and related interest. These penalties and interest can double the amount owed in some cases.
- IRS Levies and Liens – The IRS is an extremely powerful creditor. A company can find their bank account cleared out, amounts owed from customers taken, and liens filed against the business.
- Reputation Harm – A Notice of Federal Tax Lien alerts the public of the company’s problems. This may make it difficult to get loans and may harm the continued relationships of a business with suppliers and other creditors.
Can a Company with Payroll Tax Problems Survive?
While the IRS does not want to shut down a business and to eliminate the jobs of employees of the business, the government will not permit the situation to get worse and the debt to continue to grow. Over the next few weeks, we’ll continue to cover topics such as Payroll Tax Penalties, levies and liens, and personal responsibility of “Responsible Persons”. We’ll also cover options to deal with Payroll Tax Problems of a business including Payment Plans, Offers in Compromise, and protecting the assets of “Responsible Persons”.
Do You Need Help?
There are options if you find yourself with Payroll Tax Problems. Those include payment plans for salvageable businesses and a focus on protecting the personal assets when the business can’t be saved. If you need help with this or other IRS problems, I’d be happy to talk with you. Please give me a call at (972) 821-1991 or email me at [email protected] If you’d like to learn more about us, please visit our website at https://jablonskyandassociates.com/.
