IRS Payroll Tax Debt

Why Is the IRS So Aggressive Collecting Employment Taxes?

The IRS is much more aggressive in its attempts to collect business employment tax in comparison to personal income tax. There are several reasons for the IRS' hard line stance on back payroll tax.

A large part of a business payroll tax debt consists of tax that was to be withheld from employee's paychecks and paid over to the government as income tax and contributions toward Social Security and Medicare. The Service sees an employment tax debt as a type of theft, not only from the government, but from the delinquent company's own employees. In the eyes of the government, unpaid employment tax causes many problems.
  • The employee(s) file a tax return after year end and often get a refund. The IRS is issuing a refund of tax that was never collected.
  • FICA - the IRS does not receive Social Security or Medicare contributions from the employee or the employer, which results in the underfunding of each program.
  • The employees are getting credit for Social Security tax and Medicare tax that was taken out of their paycheck(s) but never paid over to the government.
  • If the business dissolves while owing employment tax or simply can't pay, the IRS has no other option than turning its collection efforts toward the business owners, officers and other responsible individuals.
  • Failure to pay business taxes may create an unfair advantage for one business over another in the marketplace.

In the midst of the biggest crisis of our lives, losing our business, we sought help from M&M Financial to handle the IRS. It was the best decision we ever made. They handled our affairs with the utmost professionalism, compassion and accuracy. We highly recommend this company and would use them again in a heartbeat if the need arises.
James and Linda K.
Machine Shop Owners
Chicago, IL

Do I Need a Tax Attorney to Negotiate My Business Payroll Tax Liabilities?

No. Despite what you may have heard, an attorney is not necessary to negotiate the resolution of a business employment tax debt and Trust Fund liability.

If you are considering the help of a professional, You Need a Specialist. An Enrolled Agent, CPA or an Attorney may represent a taxpayer, including a business, in front of the IRS. However, not all tax professionals specialize in negotiating IRS Employment and Trust Fund tax debts.

M&M employs Federally Licensed Enrolled Agents trained specifically in delinquent tax resolution and reduction. We've developed a Tax Resolution System that allows us to deliver consistent results for our clients.

Who Collects Payroll Tax Trust Fund Cases for the IRS?

While IRS Revenue Officers (ROs) collect most payroll tax liabilities, they aren't responsible for collecting most resulting Trust Fund tax liabilities.  Why?  The IRS collects Individual Trust Fund collection cases separately, leaving the ROs to call on more businesses in their area.

If you owe less than $25,000 in employment tax and are able to pay the total debt in 24 months or less, the IRS Automated Collection System (ACS) will be able to approve your monthly Installment Agreement (IA) to resolve your back taxes. ACS is very impersonal. You will speak to a different representative each time you call. But, you should be able to set up your IA over the phone. Contact ACS at (800) 829-3903.

If you don't meet the criteria above, a local IRS Revenue Officer will be assigned to your case for collection. ROs are considered the front line of IRS Collections. They are taught how to use the full strength of the government's powers to collect tax liabilities. Ironically, they are also instructed to make sure the delinquent taxpayer knows his or her rights during the collection process.

This can be a bit confusing for everyone involved. It can result in somewhat of a conflict of interest for the RO. They must enforce collection of the tax when necessary, while also making sure the taxpayer is aware of his or her rights to question and appeal those same collection actions. At M&M, we believe that a business owner dealing with a Revenue Officer deserves better. Sometimes you need to level the playing field. We make sure you know the rules and help you exercise your rights whenever necessary.

If you have a specific question about the Trust Fund or a Payroll Tax Debt, contact us. We'll give you straight answers to your questions.