Avoiding Dangerous IRS Employment Tax Traps

During the course of the last decade, the Internal Revenue Service (IRS) has experienced a significant decline in collectors – nearly 30 percent.

However, the IRS currently estimates that nearly $60 billion is owed from outstanding employment taxes – a staggering development, considering the fact that tax withheld by employers accounts for roughly two thirds of total IRS revenue collection. 

It is important to note that employers and other responsible parties within a business can be held liable for any withheld payroll taxes that are not turned over to the IRS in a timely manner. As a result, employers must be increasingly wary of tax traps, which the IRS may use to establish a criminal employment tax case. 

Missed Payments? Act Quickly 

Over the last few years, the IRS has implemented several new civil programs for early notification of delinquent taxpayers. The measures, meant to help close the gap between noncompliance and resolution, include the delivery of a civil letter that could be used to prove knowledge of unpaid taxes. 

To combat noncompliance, and better inform employers of any outstanding balances, the IRS is rolling out the Electronic Federal Tax Payment System (EFTPS). This program provides employers the opportunity to reconcile tax issues and avoid the all-too-disastrous scenario of a lengthy, and costly tax battle. 

Avoid Liability Traps

When employment tax issues arise, the IRS will typically conduct interviews with business owners regarding any knowledge of outstanding employment taxes. Such interviews are committed to writing, and are signed by the business owner – a form known as IRS Form 4180. Unfortunately, signing the document confirms, in the employers own words, that there are unpaid employment taxes.

Because the Department of Justice (DOJ) uses such forms during the course of criminal prosecution, those dealing with outstanding employment tax sums, or those who have no defense for the penalty, run the risk of incriminating themselves. 

Do Not Claim Withholding On Unpaid Taxes

Another common mistake that employers make with respect to employment tax is to claim tax withholding on a W-2, on taxes that they know were never paid to the IRS. This is considered egregious behavior by the DOJ, so it’s important that business owners, or knowledgeable preparers, avoid claiming withholding in such situations. 

Whether you are struggling from unpaid employment taxes, or face hefty penalties as a result of a tax dispute, a qualified tax attorney can work with you to solve your IRS problems. 

Contacting a Tax Attorney 

If you have an IRS tax issue, it is important that you do not delay in consulting with an attorney. In and around Tyler, Texas, the tax law specialists at the Scammahorn Law Firm, P.C. have the legal knowledge and litigation experience necessary to successfully rectify IRS tax issues, including employment tax disputes. No matter what issues you face, our legal team will support you and advocate for a favorable outcome, avoiding as many penalties as possible. 

Our attorneys are ready, willing and able to advocate on your behalf today. To get started, we welcome your call to the Scammahorn Law Firm P.C. at (903) 595-1000 to schedule your initial consultation.