If you have a business in America you are required to remit payroll taxes to the IRS.  These taxes include contributions from the business as well as deductions taken from the employee paychecks.  Unfortunately, the economic crisis has caused many businesses to fall behind on these payroll taxes.  Some businesses have even resorted to the illegal act of borrowing from the payroll taxes in order to keep their businesses afloat.  This leaves businesses in a position wherein they must find a payroll tax settlement option with the IRS.

Regardless of the reason you find yourself needing a payroll tax settlement, you should be aware that the IRS takes payroll taxes very seriously.  The IRS can and will use very aggressive techniques in order to collect on delinquent payroll taxes.  Unlike other creditors, the government has more authority and resources at their disposal.

Some of the collection efforts the IRS can enact include freezing assets, confiscating property, bank accounts and any other assets, assessing penalties and interest as well as criminal prosecution.  Failing to pay payroll taxes can be prosecuted as theft, evasion and/or fraud which can result in incarceration.

Once you determine that you are delinquent on your payroll taxes it is imperative that you contact a tax professional immediately.  Any hesitation or procrastination will bring forth very aggressive collections activities against you.  A tax professional can help you determine what payroll tax settlement options apply to your specific circumstances.  They can also communicate on your behalf with the IRS, thereby eliminating the intimidation and fear associated with talking to the IRS yourself.

Some of the payroll tax settlements available include:

• Installment agreement:  a monthly payment plan agreed upon between you and the IRS
• Offer in Compromise: an offer to pay a lesser amount, also agreed upon by the IRS
• Uncollectible Status: proof that you are unable to pay now or in the future

Payroll tax settlements can be more complicated than you realize.  They include many stipulations that must be adhered to or you risk having your settlement revoked and the initial debt re-issued.

Remember your tax debt instantly increases substantially once you become delinquent. The IRS assesses penalties and interest from the due date until it is paid in full.  The penalty on delinquent payroll taxes can be up to 100% of your original debt.   On top of that you add interest and you can easily see why contacting the IRS in order to establish a payroll tax settlement needs to happen quickly!

A qualified tax professional can assist in finding the right payroll tax settlement option for you as well as assist you with the financial statements and documentation required by the IRS.  Each settlement option has very strict requirements that must be met.  Unfortunately many settlement offers are declined by the IRS simply because of errors in the paperwork being submitted by individuals.  Avoid this pitfall!  It could mean the difference between losing not only your business and your home and also losing your freedom after criminal prosecution.