Payroll Tax Problems

How to Deal With 941 Payroll Tax Problems

941 payroll tax issues are among the most common problems that IRS seriously pursues. Whether it’s an accident, ignorance, or by design, there are many business owners, and even few large businesses, that end up having problems with the IRS because they did not handle their 941 payroll taxes properly.

Usually the 941 payroll taxes issue is caused by either not submitting a needed payroll tax form promptly, or otherwise not filing it at all. If you have paid the payroll tax deposits and still had a problem with the form, the IRS is often ready to allow you to clear it up by simply getting the actual form to them as fast as possible. You might be assessed a small punishment, but that is generally not the case.

The actual 941 payroll tax issues are the ones that are caused by failing to make the required payroll tax deposits promptly and in the appropriate amounts. If you have a business enterprise that has workers, you have to make the proper deposits. 

These are the most popular:

  • Medicare tax
  • Social Security tax
  • Federal Unemployment tax
  • Federal income tax

Along with withholding the cash from your workers’ wages and depositing the money on their behalf, you might also need to pay a corresponding amount for some of the taxes. Some of the tax liabilities are documented by the IRS quarterly with IRS Form 941, while others are reported yearly by utilizing Form 940.

Do not confuse depositing with reporting; these are two completely different procedures. Reporting informs the government the amount of money you owe. Depositing is the means of actually giving them the money in a well-timed manner as well as in the accurate amount.

Based upon the scale of your payroll, you are needed to make the payroll tax deposits either weekly or monthly. The IRS can make this decision the first-time you file the taxes. It’s not your responsibility to pick one.

Small business owners who end up in trouble over the payroll tax situations often do so simply because they skip one or two deposits. Whether or not you forgot to make the deposit, or you did not have enough cash and you intended to get “caught-up later,” the outcome is the same as the IRS is concerned.

If you miss even a deposit, you begin receiving an automated numbers of letters. These letters could begin friendly, but before long, they will start threatening lawful and civil penalties which includes penalties, interest, fines and in tremendous cases, criminal action.

The Steps To Take In Case You Have 941 Payroll Tax Issues

If you could resolve the issue immediately whether by filling out the form, or perhaps doing the deposit, and IRS is not hitting you with big fines; simply do it. That is the least expensive and least complicated solution.

But, if your payroll tax issues have escalated to a critical level, you will need to engage a tax professional to act for you before the IRS. A professional enrolled agent has gone through special training and has the understanding and experience needed to stand for you before all managerial levels of the IRSOften they could negotiate reimbursement between you and the IRS. 

While that reimbursement will not include soothing you of the accountability to make the actual tax deposits you neglected to make, your tax agent might be able to successfully reduce or remove the amount you’ve been charged in penalties, interest or fines.

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