IRS Payroll Tax Relief for Businesses
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Owe Back Payroll Taxes? Take Action Before the Problem Gets Worse.
Unpaid payroll taxes can create a serious problem for both a business and, in certain circumstances, the individuals responsible for handling the company’s employment taxes.
If your business has fallen behind on Form 941 payroll taxes, federal tax deposits or other employment-tax obligations, Tax Help Hawaii can review your situation, help bring required filings into compliance and evaluate available options for resolving the tax debt.
Call NOW for Your FREE Tax Relief Consultation
Call Tax Help Hawaii: 310-966-0266
Why IRS Payroll Tax Debt Requires Immediate Attention
Employers have important responsibilities when they pay employees.
Federal income tax and the employee portion of Social Security and Medicare taxes withheld from employees’ wages are generally considered trust fund taxes because the employer holds those funds in trust until they are deposited with the U.S. Treasury.
Failing to properly deposit and pay employment taxes can result in:
IRS penalties and interest
Federal tax liens
IRS collection activity
Contact from an IRS Revenue Officer
Potential assessment of the Trust Fund Recovery Penalty
Possible personal liability for certain responsible individuals
More serious enforcement in cases involving willful violations
The sooner a payroll-tax problem is addressed, the more opportunity there may be to develop an appropriate resolution strategy.
Form 941 Payroll Tax Problems
Form 941, Employer’s Quarterly Federal Tax Return, is generally used to report federal income tax withheld from employees along with Social Security and Medicare taxes.
If required Form 941 returns haven’t been filed, one of the first steps may be determining which quarters are missing and preparing the required returns.
Tax Help Hawaii can help review:
- Missing Form 941 returns
- Outstanding payroll-tax balances
- Federal tax deposit issues
- IRS notices
- Penalties and interest
- Existing IRS collection activity
- Business financial information
- Potential payment and resolution options
Getting current with required filings and deposits is extremely important when trying to resolve an existing payroll-tax debt.
What About Form 940?
Form 940 is used to report annual Federal Unemployment Tax Act—or FUTA—tax.
FUTA tax is different from the employee taxes withheld and reported on Form 941. FUTA is generally an employer-paid tax and isn’t withheld from employees’ wages.
A business with payroll-tax problems may have issues involving Form 941, Form 940 or other employment-tax requirements. Tax Help Hawaii can help determine which filings and liabilities need to be addressed.
What Is the Trust Fund Recovery Penalty?
Under Internal Revenue Code Section 6672, the IRS may assess the TFRP against a person who was responsible for collecting, accounting for or paying over trust fund taxes and willfully failed to do so.
The penalty can equal the unpaid trust fund portion of the employment taxes. This means that under qualifying circumstances, the IRS may seek collection not only from the business but also from one or more responsible individuals.
Who Can Be Considered a Responsible Person?
There isn’t a single job title that automatically determines responsibility.
Depending on the facts, a responsible person could potentially include:
An officer or employee of a corporation
A corporate director or shareholder
A partner or member of a business
A payroll or accounting employee
A person with authority over business finances
Another individual with sufficient control over the company's financial decisions
The IRS looks at the person’s actual authority and control, not simply their title.
Authority to sign checks can be one factor, but having check-signing authority does not by itself automatically establish TFRP liability.
Frequently Asked Questions
What Does “Willful” Mean for the TFRP?
For the Trust Fund Recovery Penalty, responsibility alone isn’t enough. The IRS must also establish willfulness.
Generally, this involves determining whether a responsible person knew—or should have known—about the unpaid trust fund taxes and intentionally disregarded the obligation or was plainly indifferent to whether the taxes were paid.
Because the determination is highly dependent on the facts, anyone facing a proposed TFRP assessment should take the matter seriously.
Has the IRS Requested a Trust Fund Recovery Penalty Interview?
The IRS may investigate responsibility for unpaid trust fund taxes and interview individuals who may potentially be responsible.
If you’re facing an IRS investigation involving the Trust Fund Recovery Penalty, it’s important to understand what the IRS is evaluating before responding.
Tax Help Hawaii can review the tax periods, business structure, financial responsibilities and IRS collection history to determine the appropriate next steps.
Can a Business Set Up a Payment Plan for Payroll Taxes?
Potentially.
The IRS offers payment-plan options for qualifying businesses, including businesses with certain trust fund tax liabilities.
Eligibility depends on factors including the amount owed, filing compliance, current tax deposits and the business’s financial circumstances.
Beginning in 2026, the IRS also uses Simple Payment Plans for certain qualifying business trust fund liabilities. If your business doesn’t qualify for a simplified option, other installment-agreement procedures may still be available.
Tax Help Hawaii can evaluate which options may apply to your business.
Can Payroll Tax Penalties Be Reduced?
Possibly.
Employment-tax liabilities can include significant penalties, including penalties related to filing and federal tax deposits.
Depending on the particular penalty and circumstances, IRS penalty relief may be available.
Tax Help Hawaii can review assessed penalties and determine whether reasonable-cause relief, administrative relief or another applicable form of penalty relief should be considered.
Already Working With an IRS Revenue Officer?
If an IRS Revenue Officer has contacted your business, requested financial information or begun investigating unpaid payroll taxes, don’t ignore the contact.
Tax Help Hawaii can review the notices and collection status and, for qualifying representation matters, communicate with the IRS under an appropriate Power of Attorney.
The objective is to understand exactly what the IRS is pursuing and develop a strategy for addressing both current compliance and past-due payroll taxes.
Current Payroll Tax Compliance Is Critical
A business seeking IRS relief will generally need to address its current employment-tax responsibilities, including required returns and federal tax deposits.
Tax Help Hawaii can help identify:
What hasn't been filed
What hasn't been paid
What must be corrected now
What resolution options may be available
Resolve the Payroll Tax Problem and Protect Your Business
Payroll-tax debt doesn’t necessarily mean your business has to close.
The appropriate solution depends on how much is owed, whether required returns have been filed, whether current deposits are being made, the financial condition of the business and whether the IRS is considering personal liability against responsible individuals.
Tax Help Hawaii can review the complete situation and help determine the appropriate path forward.
FREE Payroll Tax Relief Consultation
Call Tax Help Hawaii: 310-966-0266
Serving Maui, Hawaii and businesses nationwide with qualifying federal IRS payroll-tax matters.
Payroll-tax resolution options, payment arrangements, penalty relief and Trust Fund Recovery Penalty determinations depend on the facts of each case and applicable IRS rules. Results are not guaranteed.