What If You Can’t or Fail to Pay Back Business Payroll Taxes


Many companies fall behind on payroll taxes when they spend the money owed to the IRS on other expenses needed to keep the businesses running. Unfortunately, the IRS doesn’t necessarily care about the reasons why the taxes haven’t been paid; the primary concern of the IRS is to collect every penny of the payroll taxes that you owe – including the original amount owed, as well as any back taxes that may be accruing.

Failing to pay your payroll taxes does not mean that the IRS will come after you right away. In fact, it’s common for the IRS to wait a year or longer to contact you about your outstanding tax bill. This, however, does not mean you should wait around. If you know that you haven’t paid all of your payroll taxes, you must take the initiative to determine next steps. Remember, just because there’s a chance that the IRS may not come after you for payment does not mean that penalties and interest are not accumulating. With each passing month, you owe the IRS increasingly more in penalties and interest; these fees are in addition to the original amount of back taxes owed.

Upon realizing that you have not filed the proper payroll tax forms, the IRS will send you a notice. Once you submit in the proper form or forms, the IRS can determine how much you owe – in addition to any penalties and interest that have accrued – and send you a notice with the correct amount owed.

Not paying back payroll taxes will result in the IRS sending you a series of letters notifying you of how much you owe, what the next step is, and what you can do to get back on track. If you ignore these IRS notices, the final notice will come via certified mail, alerting you to the fact that the IRS intends to use alternative methods – such as tax liens and tax levies – to receive payment.

The best thing to do if you cannot pay back your delinquent business payroll taxes is contact the IRS to set up an installment agreement. With an installment agreement in place you will still owe your original payroll taxes – as well as the amount agreed upon with the IRS – but you will also avoid liens and levies, and bring your account back to order.

If you cannot pay the IRS the payroll taxes that are due, you must contact them to discuss your options. The worse thing that you can do is avoid the situation, letting penalties and interest accumulate and finding your balance spiraling rapidly out of control.

Business Tax Relief Topics

Back Taxes Frequently Asked Questions
Common FAQs regarding various tax problems with the IRS and/or State tax agencies.

Common Small Business Tax Problems
Common problems that small businesses run into with the IRS (Payroll 941, Classifying Workers, Overstating Deductions).

How to Resolve Unpaid Business Payroll Taxes
Resolving the issues that arise from being delinquent on business payroll taxes is no easy task. Here are some of your options that you have.

Consequences of Delinquent Business Payroll Taxes
Not keeping payroll taxes as a priority for a small business can lead to some of the harshest tax penalties the IRS gives. Know the potential consequences of failing to pay y our payroll taxes.