Do you have overdue payroll taxes? Are you looking for payroll tax debt relief? If so, this tax liability is a serious matter that needs to be addressed right away. Otherwise, your organization could face some serious legal consequences. Some of the ways on to pay back payroll taxes include an offer in compromise, and payment in installments. Details below.
Payroll Tax Debt Relief: Ways to Settle with the IRS
1. Offer in Compromise
Offer in Compromise is a legitimate option allowed by the IRS to settle your delinquent payroll taxes for less than what you really owe. While it usually applies to individual taxpayers, some organizations also qualify.
The IRS considers a number of factors when accepting an offer in compromise. This includes the ability to pay, income, expenses, and asset equity. If your offer represents the highest amount they can collect from the organization, they may accept the offer.
2. Penalty Abatement
The IRS penalizes past due payroll taxes, but it also offers penalty abatement to organizations by virtue of its First Time Penalty Abatement policy under certain circumstances. These circumstances include a clean tax record for the last three years, filing all current returns or an extension of time to file, or paying, or arranging to pay taxes due.
Prior to requesting a payroll tax debt relief under this policy, it might be best to fully pay the taxes due first.
If your client cannot pay his tax bill within 120 days, he may qualify for an online payment agreement. https://t.co/G8Lh6tvuhH
— IRS (@IRStaxpros) November 15, 2017
3. Partial Payment Installment Agreement
The Partial Payment Installment Agreement is available to those who are unable to pay the full monthly tax payable. By virtue of this agreement, the IRS allows the taxpayer to pay in installments until the debt expires. As provided by law, tax debts expire after a certain period of time. The taxpayer no longer has to pay it once the period expires.
Taxpayers nevertheless, should set up a payroll tax debt relief so the IRS won’t have to enforce your debt on your assets, wages, and passport.
4. Currently Not Collectible
Currently Not Collectible is a status granted to a person or organization that is unable to pay delinquent payroll taxes due to financial constraints. The IRS defers their collection activity from accounts with this status, which means there will be no need to file an installment agreement or other payroll tax debt relief.
The taxpayer or organization can use this grace period to come up with enough resources to pay their dues. However, the tax debt will continue to accumulate interest and late penalties, which means this status should not be treated lightly.
Before learning how to settle payroll tax liabilities, you must first understand what payroll taxes are. PAYDAY Workforce Solutions shares a short clip of what they are about:
Failure to pay taxes is a crime. This is why the IRS is very aggressive when it comes to collecting past due payroll taxes, among others. When faced with this situation, it is best to address it immediately, instead of delaying it out of fear or other excuses.
Did your organization fail to pay its taxes due? If yes, which among the following do you find most applicable to your situation? Let us know in the comments section below.