Don’t Panic: How to Handle Back Payroll Taxes Owed to the IRS

By Todd Whalen - February 15, 2023

Are you an employer that has recently discovered you owe back payroll taxes to the IRS?

You are probably feeling overwhelmed by the gravity of your situation. You’re also probably confused as to how to start the process of resolving this issue.

Both of those feelings are completely normal.

Fortunately, Advanced Tax Solutions has extensive experience dealing with the IRS on all kinds of back payroll tax issues. No matter how dire your situation might feel today, we can provide you with the back payroll tax help you need.
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Understanding Back Payroll Taxes

Back payroll taxes are taxes withheld from employee paychecks but never properly submitted to the government by the employer.

Because these taxes do not belong to the employer in the first place, they are typically referred to as a “Trust Fund.” An employer that intentionally fails to pay the taxes they withhold can be held liable for a “Trust Fund Recovery Penalty.”

That offense can include criminal charges in addition to the penalties and interest that come with regular back taxes, as the IRS sees these types of infractions as stealing from both the employees and the government.

Steps to Resolving Your Payroll Tax Problems

The first step in resolving your back payroll taxes is to understand the complete scope of the problem, which means pulling together records of all payroll taxes withheld and documentation of all employees, including their W-2 forms.

Next, you will want to figure out exactly how the problem occurred in the first place. These issues are typically the result of a lack of funds, poor record keeping, or an honest oversight.

Once you have all the details on exactly what went wrong, the next step is to contact the IRS, state tax agency, or local tax agency to ask for help resolving the issue. In most cases, they will be willing to work with you to put together a payment plan to keep your operation current.

With a plan in place to settle the account, the last step will be to implement internal controls to ensure that it never happens again. You will also want to make all employees aware of the situation and your efforts to address it.

If you have any problems along the way, a tax professional’s assistance can be a tremendous help.

Expert Assistance With Payroll Tax Issues

Having a professional tax service in your corner can help you with everything from calculating what you owe to dealing with government agencies on your behalf.

They will also have plenty of experience to draw on to help you understand what to expect, and in some cases, might even be able to help you qualify for payroll tax debt relief assistance.

If you are currently dealing with back payroll taxes, contact a specialist at Advanced Tax Solutions today for help to get your business back on track.
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