Unpaid taxes can impose stress and financial uncertainty on the individuals and businesses finding themselves in a delinquent situation. Ignoring this matter can result in bank account levies, paycheck garnishments, property liens, and property seizures being utilized by federal and state collectors to recoup the money. Unpaid payroll taxes deducted from employee paychecks can be personally collected from the responsible business executives.
There are options available to remedy delinquent situations, including:
- Monthly payment plans
- Partial payment plans
- Offers in compromise
- Penalty abatement
- Non-collectible status
The applicability of each of these settlement options to a taxpayer is based on documented financial information that must be submitted to the collecting department.
If required returns have not been filed, tax agencies prepare estimated returns based on the income information they receive from filed forms W-2, 1099, and others. These returns are always higher than an actual return for the same period because allowable deductions are unknown, and therefore omitted. Unfiled business payroll tax returns are estimated based on prior actual filings. Collection actions are then taken on the amounts calculated from these estimated returns.
While it is in every taxpayer's best interest to file actual returns, some agencies will not negotiate payment arrangements until this is done.