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Jax Tax
Jax Tax, Tax Attorney
Category: Tax
Satisfied Customers: 1408
Experience:  JD, LL.M in Business and Taxation, IRS Enrolled Agent. Expert in Business and Tax Transactions
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I owe 30k in employee 941 taxes on my business, I have made

Customer Question

I owe 30k in employee 941 taxes on my business, I have made some payments on time but just really could not afford them. recently slashed payroll and am trying to catch up and am current for this quarter. How should I proceed to work with the irs?
Submitted: 5 years ago.
Category: Tax
Expert:  Richard replied 5 years ago.

Good afternoon. You can deal with the IRS in one of two ways: i) if you can pay it within 60 months, the IRS will work out an installment payment arrangement with you; or ii) if not, you would want to file an application for an Offer in Compromise where the IRS will agree to forgive all or a portion of it that can't reasonably be paid within the 60 month period. You can find a step by step process for filing the Offer in Compromise application, as well as the full details of the program, in the IRS Offer in Compromise booklet which you can find at the following website:



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Expert:  Jax Tax replied 5 years ago.
Since this is 941 payroll debt, a 60 month agreement is not available. You have two options.
1. Pay the debt below $25k which includes penalties and interest and enter.into a 24 month payment plan. This can be done by calling(NNN) NNN-NNNN
2. Call the same number and they will have the file assinged out to a revenue officer. You will need to provide the RO with form 433b to establish a payment plan based on your ability to pay.
Both require you to be current of payroll deposits and not incur debt going forward.
Expert:  Jax Tax replied 5 years ago.
If you do not pay it below $25k, the revenue officer will do what is called a Trust Interview. The owners and other responsible.parties will be personally assessed the portion ofnthe tax that was withheld from the employees' pay checks. They will then be required to complete form 433a to establish a personal payment plan, set up a 60 payment if total debt is under $25k, or pay the amount in full. This requires all personal tax returns 2005-2010 to be filed.
Expert:  Jax Tax replied 5 years ago.
Whether personal or business, the IRS will file tax liens if the debt is over $25k, and if nothing is done will resort to levy action. To summarize, you must establish you will not continue to owe. The best option is to ensure all returns are filed and the debt is under $25k setting up a 24 month payment plan by calling.If you are a sole prop not incorporated or having an LLC set up, the business and personal are merged. This means that your 1040s 2005-2010 and all business returns must be filed. The total debt between the two must be under $25k, and it must be paid in 24 months. All business returns must be filed. If it cannot be paid in 24 months, you only supply form 433a including the business income on page 5 and 6 of the A instead of a separate form 433b. If you cannot pay below $25k and have a Sub S tax election in place filling form 1120s, you need to ensure all owners that are working for the business are being paid a fair wage as a w2 employee. Of this is not done, you are in violation of federal law and when the 433b financial is done, no money will remain for the owners to pay any personal bills as distributions are not a valid business expense when you owe the IRS. Do not file an offer in compromise. You will be wasting your time. The IRS will not settle your business tax debt. They can, but you will not be successful at an in business Offer without professional help and even then it is not likely.
Expert:  Jax Tax replied 5 years ago.
Your only option is to pay it. The question is how. Either within 24 months with ease or you spend the next year negotiating with the IRS for more time while your business financial circumstances are under extreme scrutiny.
Expert:  Jax Tax replied 5 years ago.
Please.let me know if you need additional assistance.
Jax Tax, Tax Attorney
Category: Tax
Satisfied Customers: 1408
Experience: JD, LL.M in Business and Taxation, IRS Enrolled Agent. Expert in Business and Tax Transactions
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