Darrin Mish, Tax Attorney, discusses problems and solutions regarding delinquent or late payroll taxes.

Very often, it can take years before the IRS can discover, or make advances, to collect payroll taxes from employers. Unfortunately, this problem tends to escalate or pyramid, where employers miss a payroll here or there, and then eventually it gets out of control.

Probably, the first step to take is to get current with depositing payroll taxes as quickly as possible. Getting current does not necessarily mean to pay all the delinquent taxes as fast as possible.  Instead, it means for employers to begin paying their current payroll taxes right away.

Payroll taxes are comprised of both the employer’s portion and taxes withheld from employees. Employers or other responsible persons can be held personally liable for the trust fund portion, or taxes withheld from employees, that are not remitted. Responsible persons not only includes owners, but includes any individual who exercises control over the hiring, firing or payment of wages and taxes.

The IRS views the failure to remit these taxes as “theft” and takes this very seriously. In most cases, the IRS will not enter into an offer-in-compromise, or settlement for less, on the payment of payroll taxes, but will instead demand the employer enters into an installment agreement, or payment plan, usually with full payment being satisfied within 2 or 3 years.

Payroll taxes can be extremely complicated and will likely require professional representation in the negotiation or settlement.