How can I fix owing federal Payroll taxes?

Question

4 years ago I had a business that went under. Prior to that I knew it was and began to cover my employees payroll with the tax account. When I went out of business I used the last of it to pay the 18 staff members payroll off. Felt good then, but now I owe roughly $20K.. Initially I tried to make payments but discovered that I couldnt live off $400 a month..Because I got sued, garnished etc.. I really want to fix all of this. I was a S Corp at the time but the Feds show no "Computer" records of that even though I have the papers accepting / showing I was set up by them..So cant even write of the corporate debt! I thought of doing a compromise offer but am worried I will mess it up. No money now for a Corporate attorney either! Ugh.. Anyways, between child support that IS current and all this debt..I doubt I will ever have a house without room mates.. I have no assets etc.. Besides a quick trip to Mexico, any ideas??

Answer 1

The IRS gets VERY unhappy with people who don't pay in the payroll taxes they deducted from their employee's paychecks.

But good luck though.

Answer 2

You can't fix the payroll tax debt.  In fact, the penalty is 100%.  The Social Security and Medicare taxes you did not pay are called "trust fund" taxes.   So not paying them is even more serious than not paying your income taxes.

If you want to address this, you are going to need professional help from a good tax person.  Seek out a CPA or EA who has dealt with this problem before to represent you.  The representative may be able to address the S-corp issues with the IRS.  However, as a principal in the S-corp, the IRS is going to hold you personally responsible for the payroll taxes that weren't paid.

Answer 3

Most of your tax problem is due to payroll taxes.  Since you are out of business the IRS will work out a payment plan for you.  It sounds like you are paying thru a wage levy.  IRS will stop this if you enter into an installment agreement with them.  Go to a local IRS office and ask them for a collection information statemnet.  Fill it out and give it back to them.  you owe so much that the local office probably won't be able to work your case but they will refer you to someone who can.