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The Tax Resolution Institute Helps Allentown Pennsylvania Company With Unpaid Payroll Taxes

January 30, 2012 By

The problem of unpaid payroll taxes and the trust fund recovery penalty happens everywhere, even in growing cities like Allentown in Pennsylvania. Like Irvine and other growing cities that the Tax Resolution Institute has helped in the past, Allentown has been experiencing a challenging mix of economic growth and the subsequent challenges. Helping the process, the Allentown Economic Development Corporation operates the Bridgeworks, a business incubator that has helped to fight the recession. Such civic support in Allentown helps attract and support young commercial and manufacturing businesses.

Unpaid Payroll Taxes In Allentown

When a young commercial business in Allentown found themselves with a serious problem of unpaid payroll taxes because deposits to the IRS were missed, TRI came in to make sure the doors stayed open. We will not go into any more detail about the business to protect a client’s anonymity as we always do. It is too dangerous in a small and vibrant business community like Allentown to go even discuss the nature of the business and what it produces or what services it offers to its clients.

Tax Resolution Services in Allentown

Tax Resolution Services in Allentown

What is more important is that the company found itself with a serious financial crisis on account of unpaid payroll taxes. Hit by the recession as it continued to expand in the growing Allentown economy, the business owners “temporarily borrowed” from their employee’s payroll taxes in the trust fund in order to cover costs. But they failed to make a few deposits on time and set themselves up for terrible consequences. Rather than find an alternative financing solution, they began to cook a recipe that leads only to disaster.

 The Best Tax Resolution Services In Pennsylvania

Luckily, the tax Resolution Institute offers the best in tax resolution services in Pennsylvania. When the IRS discovered the missing payments and the delinquent deposit dates, the company began to receive threatening notices. Luckily, they were smart enough not to hesitate. Learning about the Tax Resolution Institute on the web, they contacted us for a free consultation. Peter Stephan and the tax experts at TRI presented a plan that could put an end to the crisis. By paying off the debt and a portion of the fines, the penalties were waived and the crisis was over. The company escaped without being placed in a true financial crisis that could have closed their doors in Allentown. Rather than paying the full amount owed in fine and penalties, they paid less than 10% and breathed a sigh of tax relief when TRI provided them with an unpaid payroll tax resolution and an effective solution.

Filed Under: Delinquent Tax Debts, Payroll Tax Problems, Tax Relief, Tax Resolution Services Tagged With: , , , ,

How Businesses Get in Trouble with Unpaid Payroll Taxes – 2 Key Examples From Philadelphia & Pittsburgh in Pennsylvania

January 28, 2012 By
Unpaid Payroll Taxes

The Problem Of Unpaid Payroll Taxes

In today’s tough economy, whether a result of ignorance, accident, or design, unpaid payroll taxes get plenty of business owners in trouble with the IRS. It is very easy for a business with large operating expenses and reduced sales to “temporarily borrow” from the payroll taxes account to keep the lights on. Payroll deductions are called a Trust Fund because you become a trustee of the IRS. Unpaid payroll taxes result from failing to make the required payroll tax deposits on time and in the correct amounts. Failure to collect and submit this money means you have committed a trust fund violation against the federal government. IRS Revenue Agents take such violations very seriously and responds harshly to the liable business owner.

Never forget that in addition to withholding the money from your employees’ wages, and depositing that money on their behalf, you also have the requirement to pay a matching amount for some of those taxes. And never confuse reporting with depositing. These are two entirely different processes. Reporting tells the government how much you owe. Depositing is the process of actually sending them the money in a timely manner and in the correct amount. If you mix up the two, you will be held liable for the unpaid payroll taxes.

A Business In Pittsburgh With Unpaid Payroll Taxes

The Tax Resolution Institute once helped a construction company in Pittsburgh with unpaid payroll taxes. The payroll tax crisis was caused by a misunderstanding by the owners. In a cash crunch, they had continued reporting while missing deposits. The construction company owners believed that by continuing to report the amount owed, they would not be penalized by the IRS and would be able to pay the rest later. This could not be farther from the truth. Luckily, the tax experts at the Tax Resolution Institute were able to negotiate a deal with the IRS that enabled the company to remain in business. They were given the opportunity to collect the funds needed to pay what was owed with interest and a small penalty. Without the help of TRI, their doors would have been closed and their assets sold.

Depending upon the size of your payroll, you are required to make payroll tax deposits either semi-weekly or monthly. The IRS makes this determination the first time you file your taxes. You do not choose. Business owners who get into trouble over payroll tax matters usually do so because they skip one or more deposits. And the IRS Revenue Agents do not care why you missed the deposit. Once you miss even one, you have a record of unpaid payroll taxes and you start receiving an automated series of letters. These letters quickly start threatening civil and legal penalties including interest, penalties, fines and, in extreme cases, criminal action.

IRS Officers Agents Will Not Stop Until The Trust Fund Is Recovered

IRS Revenue Officers Do Always Collect Unpaid Payroll Taxes

A Business in Philadelphia With Unpaid Payroll Taxes Helped

The Tax Resolution Institute once helped a financial services company in Philadelphia with an unpaid payroll tax problem. The previous company of the new accountant had monthly deposits. Although the construction company had to make semi-weekly deposits, the new accountant made the mistake of making monthly deposits. When the threatening letters started coming from the IRS, the owners of the construction company contacted the Tax Resolution Institute. In any tax situation with the IRS, it is always better to avoid going it alone. The Tax Resolution negotiated a positive resolution for the company with the IRS, resolving the problem of unpaid payroll taxes. Since monthly deposits had continued to be made, the trust fund recovery penalty was replaced with a small cautionary fine and a promise of future compliance.

If your unpaid payroll taxes are getting out of control, you need to engage an experienced tax professional to represent you before the IRS. The tax professionals at the Tax Resolution Institute can negotiate a payment arrangement or settlement between you and the IRS. In many cases, we are able to successfully remove or reduce the amount you have been assessed in fines, interest or penalties. Like we did with the two Pennsylvania businesses in Philadelphia and Pittsburgh, the Tax Resolution Institute can resolve an unpaid payroll tax problem and offer your company effective tax relief.

Filed Under: Payroll Tax Problems, Tax Relief, Tax Resolution Services Tagged With: , , , , , ,

How Could This Happen To Me? Peter Stephan On Why The Wealthy Have Serious Tax Problems Today (Part 1)

October 25, 2011 By

Peter Stephan of the Tax Resolution Institute gave an in-depth interview at the beginning of October about the wealthy and their sudden increase in income tax difficulties. In Part 1, Mr. Stephan describes how he is seeing so many wealthy families and individuals come to him with serious delinquent income tax problems with the Internal Revenue Service and their local state taxing agencies. In Part II, Peter Stephan explains how those tax problems continue to spiral out of control and offers potential solutions.

How Could This Happen To Me?

How Could This Happen To Me?

In well-to-do communities throughout Southern California, particularly in Orange County and the San Fernando Valley, Mr. Stephan has found a bevy of new clients in desperate need of help and wondering to themselves: “How could this possibly happen to me?” Peter Stephan explains how people with a history of a good income always believe that the next big job is just around the corner. For years, they have made tons of money, spending it almost as fast as it came in. They expanded their businesses, bought expensive homes, sent their children to private schools, and enjoyed the expensive toys of the affluent.

Independent Contractors and entrepreneurs who run their own businesses, particularly real estate brokers and high-end sales people, were slammed by the downturn in the economy. Suddenly their income was cut in half or more, and it does not appear to be coming back any time soon. The truth is that the recession and the contraction in the overall American economy hit everyone hard. When your family is used to having two big paychecks coming in every month, it is hard enough when one of those income sources is reduced.

Where Has All The Money Gone?

Where Has All The Money Gone?

Peter Stephan described how he has seen a multitude of couples where both parties were decimated when the economy in California went sour. The husband lost his job at the same time that the wife’s business went south, resulting in a sudden lack of cash for the first time in many years. How does a well-off couple maintain their lifestyle without the cash flow? Mr. Stephan calls such an attempt to not face reality a “Snowball Compound Effect” that just gets bigger and bigger.

First, the couple starts borrowing on their credit cards to pay their bills and support their family, leading to more and more debt. Second, as the recession hit the real estate market, their home value drops at the same time that their mortgage increases due to the variable rates. As the bills keep piling up and they can’t borrow any more money from friends and family, paying their taxes get lower and lower on the list of priorities.

The Weight of the Growing Debt can be Overwhelming!

The Weight of the Debt is Overwhelming!

If the family has their own business, they often stop paying payroll taxes as well, “borrowing” money from the Trust Fund. The IRS considers playing with payroll taxes and borrowing from the trust fund to be nothing less than theft from the Federal government. There is a reason why the trust fund recovery penalty is called the 100% Penalty. As the piling debt speeds up and bad decisions increase, Mr. Stephan described how you almost hear the Sonic Boom as the crisis gets wildly out of control.

In Part 2 of this article, Peter Stephan will show how and why the financial problems spiral out of control for a wealthy family in tough economic times, leading to a serious delinquent IRS income tax crisis. But there also is an answer. Mr. Stephan demonstrates how the Tax Resolution Institute can provide workable solutions that can provide real tax relief and lead to a new start before the crisis reaches the point of no return.

 

Filed Under: California Tax Relief, Delinquent Tax Debts, Income Tax Problems, Tax Relief, Tax Resolution Services Tagged With: , , , , , , ,

Orange County Alert: Serious Consequences For Unpaid Payroll Taxes For Business Owners

September 21, 2011 By

Due to a challenging economy,  number of big and small businesses in Orange County, ranging from Newport Beach to Irvine,are in constant struggle with their payroll tax deposits. Most of them have trouble keeping up with their unpaid IRS payroll taxes and they default on the trust fund. This article should serve as an alert to business owners in Newport Beach, Irvine and across Orange County that not covering your trust fund and failing to pay your payroll taxes can be the death knell for your company.

Payroll Tax Mistakes Are Serious!

Payroll Tax Mistakes Are Serious!

You should never treat payroll tax debt carelessly because it can lead to bank account and wage levies that can destroy your business. It is very dangerous to disregard or delay the resolution of such a tax debt because it could mean the end of your company. Unpaid payroll taxes are considered by the Internal Revenue Service as theft and the accompanying  penalties can include imprisonment. Unpaid IRS payroll taxes if not resolved immediately can lead to the padlocking of a business’ doors without a court order. Aside from that, unpaid IRS taxes will result to equipment seizure and contacting of clients to intercept payments owed. If it does not close your doors, such a tax scandal will destroy your reputation.

Fortunately, there are ways to get out of this financial tax mess. To get IRS tax relief for a payroll tax debt, you should contact a tax professional like the Tax Resolution Institute so action can be immediately taken. TRI can properly negotiate an IRS payment plan or an installment agreement. We can turn your IRS nightmare into a successful example of tax relief.

The IRS has special means of knowing who is responsible for failing to file payroll taxes or pay the Trust Fund. Never forget that the Trust Fund recovery Penalty is called the 100% Penalty for a good reason. The IRS can go after everyone in a business, including the owners, shareholders, officers, accountants and bookkeepers. In such cases, it is very risky to negotiate with the IRS on your own because there are legal and technical hurdles that can seriously hurt your case and your finances.

A qualified tax professional like the tax attorneys and CPAs at The Tax Resolution Institute can help protect and safeguard your future. Our tax professionals can negotiate for an IRS payment plan or Installment Agreement that suits your qualifications and financial condition. If you are experiencing a payroll tax crisis in Orange County  or anywhere else in the United States, contact the Tax Resolution Institute today for help.

Filed Under: California Tax Relief, Payroll Tax Problems, Tax Relief Tagged With: , , , , , ,

Los Angeles Camera and Lighting Equipment Rental Company Has Payroll Tax Crisis Resolved

March 22, 2011 By

Rental companies often find themselves in cash crunches when business becomes difficult, often leading to payroll tax problems and the need for tax resolution help. Since the film and television industries are based in Los Angeles, a major business for many decades has been the rental of camera, grip and lighting equipment for independent productions. Such companies seem to often experience payroll tax problems.

Los Angeles Lighting, Grip & Camera Rental Company Tax Crisis

Los Angeles Lighting, Grip, Camera Rental Company

Working with Unit Production Managers, a major production ren tal company located in the San Fernando Valley rents out millions of dollars worth of equipment to independent productions every year. In the last year, when several production entities moved their business out of state due to the rising costs of shooting in Los Angeles, the rental company found themselves in trouble. With the economy taking a downturn and capital wrapped up in their inventory, what could they do?

The old adage – when it rains, it pours – unfortunately seems to become a negative reality in business. When the rental company was facing this financial crisis, they had a bevy of equipment stolen from them by a questionable client. Although the equipment was covered under their insurance, it raised their rates and led to expensive legal fees as well.

Rental Companies Often Experience Payroll tax problems

Rental Companies Often Experience Payroll tax problems

Suddenly unable to cover their basic costs, the owners made the mistake of dipping their hands in the trust fund portion of their payroll taxes taken from the paychecks of employees. Believing they would be able to cover the difference in the coming months, they decided to steal from Peter to pay Paul and not pay their IRS payroll taxes. Peter, however, is the IRS, and the Internal Revenue Service takes payroll tax problems very seriously. In fact, they have hired many new regional Revenue Officers to go after delinquent payroll tax accounts. After all, the trust fund recovery penalty is called the 100% penalty because the federal government does not appreciate their trust fund being violated by business owners.

When an IRS Revenue Officer contacted the business owners, they realized that they had made a grave mistake. Wanting to keep their doors open, believing that the former prosperity of their business was just on the horizon, the owners contacted Peter Stephan and the Tax Experts at the Tax Resolution Institute. Examining the case against them, Peter Stephan came up with a strategy to keep the business viable. After all, in these tough economic times, the IRS wants businesses with a track record of success to keep their doors open as well. You can’t collect an unpaid payroll tax debt from a business that is forever closed. As a result, the IRS often is willing to negotiate a positive Installment Agreement or Offer in Compromise to cover a payroll tax debt.

Cutting down both the interest and the penalties, Peter Stephan was able to negotiate with the IRS Revenue Officer an Installment Agreement for the Camera, Grip and Lighting Equipment Rental Company that provided real tax resolution to their unpaid payroll tax crisis. If you own a business in Los Angeles, the San Fernando Valley or any other part of Southern California and you need help with a payroll tax problem, contact the Tax Resolution Institute. Our goal is to keep your doors open by finding a workable solution to your unpaid payroll taxes.

Filed Under: California Tax Relief, Payroll Tax Problems, Tax Relief, Tax Resolution Services Tagged With: , , , ,

The Tax Resolution Institute Helps Orange County Staffing Agency Keep Doors Open After Payroll Tax Crisis

March 9, 2011 By

With the expansion into Orange County, the Tax Resolution Institute has encountered a number of companies experiencing severe payroll tax problems in a challenging economy that need tax resolution services. Stealing from Peter to pay Paul, these companies often dip into their employee’s Trust Fund in order to cover payroll and a variety of unexpected expenses. Such a choice is often disastrous because the IRS considers the Trust Fund to be a legal responsibility of an employer, and they react to payroll tax cases with alarming swiftness and vigorous enforcement of penalties. Since the Trust Fund Recovery Penalty also is known as the 100% penalty, it can lead directly to an economic tidal wave that overwhelms a company and leads to their doors being forever closed. A perfect recent example of such an unpaid payroll tax problem came when the principals of a local Orange County staffing agency found themselves pressed by tough economic times.

Orange County Staffing Agency

Orange County Staffing Agency With Payroll Tax Crisis

Since the Orange County staffing agency has to pay their employees every week even though they often do not receive payment for their services and the services of the temps until the end of the month, they often find themselves in tough economic territory. Although this staffing company is doing well and their services were in demand, they discovered that the more temps they sent out into the workforce, the higher their bills seemed to be. In addition, their employer clients were not quite paying their bills at the end of the month, but rather putting them off until later. Sometimes payment for services would not arrive until 45 days after the fact or even longer in the most egregious cases. However, since the temps are contract employees at a relatively low hourly wage, they need to be paid on time in order to keep working and stay available. As a result, the temp agency began dipping into the trust fund, putting off the payroll tax deposits to the IRS, in order to cover the differences.

Believing they would make up the difference when the next deposit was due, the principals of the Orange County staffing agency believed that everything would be okay. When they were hit by unexpected costs, they realized that they could not cover the amount taken from the previous trust fund deposit. In addition, caught between a rock and a hard place, they were forced to take money from the next trust fund deposit as well, making a bad payroll tax problem even worse. When they came to understand that they were caught in what was quickly becoming a vicious circle, they had no choice but to take proactive action. Luckily, they stopped the storm that could destroy the future of their successful business in its tracks by making a smart choice — they contacted Peter Stephan and the Tax Resolution Institute to access the very best in tax resolution services.

The Best in Orange County Tax Resolution Services

The Best in Orange County Tax Resolution Services

Realizing how serious the situation had become, the TRI tax experts brought the principals of the staffing agency into the office and went over the recent books with them. They were informed that if they had money saved up for a rainy day, it was time to access those funds because it was pouring. Coming up with a workable game plan, Peter Stephan approached the IRS with a major payment to cover a majority of the depleted Trust Fund. By coming to the IRS with a plan of action and an initial payment, Peter Stephan was able to have the majority of the Trust Fund Recovery Penalty waived. In these difficult economic times, IRS Revenue Officers tend to react well to proactive action when a tax problem is brought to them before it is discovered. Negotiating a workable installment plan, Peter Stephan was able to put the Orange County staffing agency back on track while keeping their doors open.

The Tax Resolution Institute has opened an office in Orange County in order to help business owners across that part of Southern California from Irvine to Newport Beach, from Tustin to Anaheim. If your company is in an economic crisis and it ha sled to a problem with unpaid payroll taxes, please do not hesitate any longer. It is essential to take action today. If you need tax resolution services, feel free to contact the Tax Resolution Institute at 877-829-8370 or fill out our  tax resolution form.

Filed Under: Tax Relief Tagged With: , , , ,

New Jersey Payroll Tax Debt Solved After Newark Fish Market Falls Behind On IRS Payroll Tax Debt

September 21, 2010 By

Providing tax relief services and payroll tax solutions to businesses across the country, the Tax Resolution Institute is proud when our tax experts are able to keep the doors open of a once thriving business in Newark, New Jersey by averting a serious payroll tax problem with the IRS. In tough economic times, companies across the United States are finding themselves in a financial tax squeeze, unable to avoid dipping their hands in the trust fund owed to the IRS in order to cover outstanding debts and immediate costs. What most company owners do not understand is that playing with Payroll Taxes and the IRS Trust Fund is like playing with fire — there is a good chance that your casual choice will leave your business ventures in flames, burning down your future hopes of profitability.

In Newark, New Jersey, a once thriving high-end fish market found their business under the gun when demands by restaurants for the expensive end of the catch began to die down with the recession. Suddenly, although the fish market had the same number of workers to be paid and continued to take on large and expensive catches due to pre-existing contracts, the fancy fish were left either to go bad on ice with freezer burn in their warehouse or had to be sold at virtually pennies on the dollar. In either case, profits quickly dried up, and the owners of the fish market found themselves under the gun — bills to pay, costs to cover, and not enough money coming in the front door.

Unpaid Payroll Taxes Threaten A Newark Fish Market

Unpaid Payroll Taxes Threaten A Newark Fish Market

Although they managed to cut back by reducing their staff, they had faith in the return of the good old days and they did not want to seem week and lose their best customers that still remained. In the thick of the financial storm, it was important to show a brave face. As the recession deepened and sales continued to decline, the initial payroll tax crisis became a real disaster, threatening to permanently close the doors of the fish market. Although the owners had yet to hear from the IRS, they knew it was only time before the other proverbial show dropped. With America in a recession and the federal government in distress, the Internal Revenue Service is going after unpaid payroll taxes with a renewed focus and energy, making sure that businesses are paying their fair share and covering the tax debt of the trust fund. If the trust fund comes up short, the trust fund recovery penalty kicks into action.

The Trust Fund Recovery Penalty, otherwise known as the 100% Penalty, is designed to keep business owners honest and protect the trust fund owed to the IRS. If the trust fund is not covered in full when due, the trust fund recovery penalty means the business owner will not only have to pay the original trust fund amount plus interest but will also be penalized 100% of the original amount due. Such huge penalties have sunk many a thriving business, leading to bankruptcies and closed doors.

Tax Relief Services Keep The Doors Open

Tax Relief Services Keep The Doors Open

Knowing the possible threat looming, the Newark Fish Market in New Jersey came to the tax experts at the Tax Resolution Institute for help. With extensive experience working with the IRS and negotiating workable outcomes in unpaid payroll tax cases, the Tax Resolution Institute is a refuge for companies when the IRS threatens to close their doors. By explaining the situation to the IRS Revenue Officer while offering immediate payment of the back payroll taxes owed, the 100& penalty was waived in order to keep the doors of the business open. In addition, an Installment Agreement was negotiated to cover the interest portion of the trust fund over a reasonable period of time as the fish market recovered from the financial crunch. Although times are still tough, the Tax Resolution Institute is proud to say that the doors of the Newark Fish Market in New Jersey remain open and the workers are still working.

Filed Under: Payroll Tax Problems, Tax Resolution Services Tagged With: , , , , , , ,

Payroll Tax Problem Solved In California — San Diego General Contractor Keeps Building!

September 7, 2010 By

In a challenging California economy, TRI realizes that general contractors have found their work schedules shortened and the best jobs more competitive to bid on. After thriving in the first part of the decade, many of these companies have been forced to make tough decisions in order to keep their doors opens and the profits flowing. Recently, a major San Diego general contractor approached the Tax Resolution Institute because the recent difficulties had led to poor decisions in regards to unpaid payroll taxes that placed their future in jeopardy with IRS Revenue Officers.

When crunch time came and bills needed to be paid, the general contracting company found itself short of the cash necessary to cover the costs. Believing that a number of major payments were on the horizon, the principals made the mistake of taking money from the payroll tax trust fund owed to the IRS to make up for the lack of funds. What they did not realize is that messing with Payroll Tax payments to the IRS can often be the final straw that breaks the proverbial camel’s back.

IRS Payroll Tax Debts In San Diego

IRS Payroll Tax Debts In San Diego

When the San Diego general contractor came to the Tax Resolution Institute, one bad move had snowballed into a full blown crisis. When the payments did not come in and the bills continued to pile up, the first choice to take from the trust fund made the second one easier to make. By the time the IRS caught up with the lack of payroll tax payments, there would be enough money in the company coffers to cover both the payroll tax debt and the resulting penalties. What the company did not realize was that the Trust Fund Recovery Penalty also is known as the 100% penalty. Not only would the trust fund have to be paid in total, there would be a staggering amount owed due to the Trust Fund Recovery Penalty plus the resulting interest. As time passed, the vigilant IRS Revenue Officers discovered the discrepancy and came after the San Diego company with a vengeance. As the largest collection agency in the world, the IRS never forgets. Sooner or later, if you have unpaid payroll taxes, the IRS will catch you and will prosecute to the fullest extent of the law.

Luckily, before the problem led to the San Diego general contractor being forced to close their doors and add to the unemployment rolls, the principals came to the Tax Resolution Institute. Although the payroll tax debt owed to the Internal Revenue Service was well into five figures (we cannot be specific because TRI always protects the anonymity and privacy of our clients), the tax experts at the Tax Resolution Institute were able to use their experience and expertise to work out a viable and beneficial deal for the San Diego general contractor. The Trust Fund Recovery Penalty did not end up destroying the future of the company.

In the end, the general contractor survived the payroll tax crisis with the ability to keep their doors open. As a result, their workers are continuing to build today, helping keep the revival of the California economy moving forward and renewing the prosperity of the San Diego business world. If your company has unpaid payroll taxes and is in a payroll tax crisis with the IRS, please contact the Tax Resolution Institute so you can maintain your future productivity and profitability.

Filed Under: California Tax Relief, Payroll Tax Problems Tagged With: , , , , , ,

Payroll Taxes In California (1099 vs. W2): IRS Payroll Tax Consequences of Tax Misclassification

September 3, 2010 By

In a challenging economy, the Tax Resolution Institute has seen companies attempt to cut costs by choosing to distinguish workers as 1099 independent contractors instead of W2 employees. If IRS and state guidelines are not followed, however, business owners can find themselves in a world of trouble. As a result, since Payroll Tax Problems can be so extreme, the Tax Resolution Institute wants to help you clarify this situation. We will provide you with the information you need to make the right decision that will help you avoid the payroll tax problems of misclassification.

The Payroll Tax Choice — W2 vs. 1099

The Payroll Tax Choice — W2 vs. 1099

The choice between 1099 and W2 determines whether an individual is an independent contractor or an official employee. 1099 indicates Independent Contractor (IC) status, meaning that a business has less liability for the contractor’s acts and less ability to control how the work is done. W2 indicates “employment” status. As a result, a company can determine the time/methods/means by which work is executed. In addition, your company has greater liability for a worker’s actions and potential negligence. But it must be done correctly or serious unpaid payroll tax problems can arise to hurt your business.

This type of misclassification is one of the most contested payroll tax issues that businesses consistently have with the IRS. While you might like the simplicity of the independent contractor status for your employees, if they really are your employees, you are required to put them on payroll, giving them a Form W2 at the end of the year. Misclassifying an employee is the same as not paying your payroll taxes and is considered a serious offense by the Internal Revenue Service and the California Employment Development Department.

It is important to classify a worker as either an employee or an independent contractor (1099) to avoid IRS penalties for not properly withholding and paying FICA and payroll taxes. The IRS takes extreme action against employers whom they catch avoiding unemployment taxes and delaying tax collection. Additionally, California has hardcore rules as to when employers must pay into state unemployment funds and carry workers compensation coverage.

When done improperly, misclassifying workers as independent contractors can lead to serious problems and consequences. If the individual really is doing the work of an employee, the Internal Revenue Service or the California Employment Development Department might reclassify the individual as an employee, erasing the presumed financial benefits. In addition, your company will be charged interest and penalties. If you are caught willfully avoiding payroll taxes, criminal charges and the 100% trust fund recovery penalty can come into play as well.

Caution — The IRS Is Watching You!

Caution — The IRS Is Watching You!

TRI believes  most important issues to consider are “Degrees of Control”, and who dictates when where and how? Does the employer direct and control how the work is done? Are instructions provided and is training given? These questions help to define degrees of control. Employees are subject to instructions and rules about when, where and how they work while an independent contractor generally is free of such restrictions.

The tax and additional consequences of misclassifying an employee as an independent contactor are costly and can also include paying both the employer and employee’s share of Medicare and Social Security, paying federal income taxes and state income taxes that should have been withheld, and paying federal and state unemployment benefits. All of these payments do not include the possible interest and penalties mentioned above. Unpaid payroll taxes are a serious problem.

If you want to treat an individual as an independent contractor rather than employee, structure the relationship appropriately. We can help your company avoid payroll tax problems with the IRS and  payroll tax problems with the California Employment Development Department. In this recessionary economy, there is no reason to make tough times worse by mismanaging this essential part of tax planning.

If your company is in trouble when it comes to your unpaid payroll tax payments and you need help, contact the tax experts at the Tax Resolution Institute today.

Filed Under: California Tax Relief, Payroll Tax Problems, Tax Planning Tagged With: , , , , , ,

Helping California Companies In Crisis — Tax Resolution Services and Solutions to Payroll Tax Problems

August 31, 2010 By

In a challenging economy in the United States and specifically in the state of California, a multitude of small to mid-sized companies have found themselves in a fiscal crisis as accounts dry up and clients cut back on spending. During such an economic crunch, payrolls still have to be paid and the cost of doing business still has to be covered. In light of such month-to-month responsibilities, many business owners find themselves dipping into the trust fund portion of their employee’s paychecks, proverbially stealing from Peter to pay Paul.

Payroll Taxes And The Trust Fund Recovery Penalty

Payroll Taxes And Trust Fund Recovery

In light of the 100% Trust Fund Recovery Penalty and the severity of IRS payroll tax payment monitoring and retribution, such foolish survival instincts often lead directly to the downfall of a multitude of once thriving businesses throughout the state of California. If you have made this critical error in order to keep your business running and are behind in your Payroll Tax payments, please contact the payroll tax experts at the Tax Resolution Institute before it is too later. Our focus is to make sure your doors stay open as we negotiate with the IRS on your behalf, keeping your business viable.

When the big bankers on Wall Street who received huge government bailouts proclaim the recession to be over, they are far away from the everyday reality of small to mid-sized businesses on the West Coast. Particularly in California from San Diego to Silicon Valley, the economic crunch is tightening as weeks turn into months and months turn into years. When a once successful company faces such economic turmoil, it is not surprising that a business owner would cover necessary expenses with the IRS Trust Fund portion of their employee’s checks. In addition, such employers also tend to dip into the state portion of the trust fund as well, finding themselves in deep waters with the California Employment Development Department.

The California Economic Crisis Hurts Business

The California Economic Crisis Hurts Business

The Tax Resolution Institute understands that such survival choices are not criminal acts, but a type of fortitude and endurance in the face of real economic crisis. Believing that things are getting better and listening to the prognostications of Wall Street, many business owners temporarily choose to violate the Trust Fund, believing they will have the money to make their IRS deposits as business improves. When business does not improve, perhaps even worsening, they find themselves caught in the vise of a payroll tax crisis. If you are experiencing such inordinate pressure, the time to take action is now before it is too late. Ignoring such an extreme problem will not make it go away, even if you have yet to be contacted by the IRS. Sooner or later, the IRS will figure out what is going on and take extreme action. As the largest collection agency in the world, the IRS never forgets so contact us today.

Filed Under: California Tax Relief, Payroll Tax Problems Tagged With: , , , , , ,
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