IRS Payroll Tax Debt Installment Agreement

Internal Revenue Service can accept installment payments on payroll tax debts. However, your company and you must meet certain requirements before an installment agreement is acceptable.

First, your company must be current with filing of tax returns to the date you are requesting the installment agreement.

Second, your company must be current with paying Federal Tax Deposits. What does this mean? It means that you must pay federal tax deposits for your current quarter and continue to do so in the future. If you are not current, pay current payroll deposit to show as proof of payment and stopping of pyramiding (accumulation) of payroll tax debts.

Third, be prepared to complete a personal financial statement Form 433A Collection Information Statement for Individuals if the payroll tax debt is over twenty-five thousand dollars. The reason is that payroll taxes are considered and named Trust Fund Taxes. Trust Fund because employers are trusted to account for and pay payroll taxes on behalf of the workers and the business share of social security and Medicare taxes.

Furthermore, you the owner, officer, member, partner can be held personally liable for non-payment of the trust fund taxes. Read Internal Revenue Code 6672.

If the Internal Revenue Service does not ask for a personal financial statement, do not provide one. But, be ready to submit or provide it when requested.

In addition, you do not have to be on a formal installment agreement to make payments. However, first get current by paying federal tax deposits for the current payroll period. Analyze your profit & loss statement to verify how much money you can commit to for paying in installments the prior payroll taxes.

If you are making voluntary payments for payroll taxes, make sure you designate your payment as TRUST FUND ONLY. You want your payments to be applied to the trust fund only portion for each quarter. The reason is that it reduces your potential individual liability.

If you have personal assets that you can borrow against. Then, borrow or sell those items. Send the money again designating the payment to TRUST FUND ONLY. Especially, when you cannot fully satisfy the tax debt.

Remember, you can always repay yourself by loaning the money to your company and getting payments back for the loan to pay those payroll taxes.

The main thing is to stop the accumulation of payroll taxes and get to paying the current first. Then, address the prior debt.

To stop any enforcement action such as levies (garnishment) to your bank account or accounts receivable. Request and installment agreement via telephone, on-line, or by completing Form 9465 IRS Installment Agreement Request.

You may be able to apply on-line. Your specific tax situation will determine which payment options are available to you. Payment options include paying in full or a long-term agreement (paying in more than a 120 days).

You may qualify to apply online, if:

• Long Term Agreement: You have filed all required returns and owe less than $25,000 in combined tax, penalties, and interest.

• For payroll tax debt above $25,000.00, use Form 9465 IRS Installment Agreement Request and follow the instructions that are available by googling IRS Installment Agreement instructions.

If you are a sole proprietor or independent contractor, apply for a payment agreement as an individual.

Note: Setup fees may be higher if you apply for a payment agreement by phone, mail, or in-person. Get more information on other payment agreement options and fees.

For more information on the various types of installment agreements and qualifying factors, go to www.irs.gov and search business installment agreements.

Remember, at times it is best to seek professional advice and assistance when confronting the Internal Revenue Service Collection Division.

There are so many actions that have to cease when requesting an installment agreement, notices, letters, taxpayer rights, pending installment agreement status, appeal rights and more.

To get the best solution and advise contact a payroll tax debt/audit professional who is a Tax Attorney, CPA or Enrolled Agent with many years of experience and knowledge in representing payroll tax debtors.

Go to www.advocatetaxgroup.com for free resources and more information.

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