If your business is being audited by the IRS or a state tax agency, then the earlier you involve an employment tax attorney, the better your chances are of resolving the situation agreeably.
Sodowsky Law Firm, PC helps business settle their tax issues and avoid further problems.
The Internal Revenue Code requires an employer to collect, account for, and pay withholding taxes or trust fund taxes. This money is generally deposited into a qualified bank account and held in escrow until it is transferred to the IRS.
An employer must also file a quarterly federal tax return (a 941 Return) and the federal unemployment tax return (940 Return). The requirements apply to all active employers regardless of the way their business is organized. The same rules that apply to corporations also apply to sole proprietors.
Failure to pay these taxes is considered a violation of federal and state laws. The IRS will use any legal means at their disposal to recover the past-due taxes, assess substantial penalties, force you to pay interest.
Once a business is operating in the red for a significant period of time, some business operators begin to neglect their payroll taxes. Our attorneys can help develop strategies to defend you from the accusations and prevent your business from closing. The IRS may also extend an Offer in Compromise to repay the debt in installments.
Trust Fund Recovery Penalty
The Internal Revenue Code mandates that all employers withhold social security, Medicare, and income taxes from their employees’ wages. These are collectively known as “withholding taxes” or “trust fund taxes”. These taxes should theoretically be held in a trust by the employer until they are paid to the IRS.
The IRS can convert unpaid trust fund taxes into the personal liability of anyone with power over the fund. In some cases, this can include lenders if it can be established that the lender controls the company’s credit line and affects disbursements. Our attorneys can defend officers who face personal liability for business taxes.
Employee Misclassification Issues (Independent Contractors)
Employees are entitled to several benefits under Virginia law that independent contractors are not. The trade-off is that you can’t treat independent contractors like employees. Many employers see that there is an opportunity to limit liability and reduce payroll but are unaware that the legal definition of an “independent contractor” is quite rigid. These employers may end up getting a nasty letter from the IRS or other state and federal agencies saying that they are trying to misclassify their employees as independent contractors to avoid paying benefits, overtime, and payroll taxes. Sodowsky Law defends companies that are accused of misclassification.
Unemployment Defense Attorneys
In Virginia, fired employees can collect unemployment. However, many employers feel as though they shouldn’t have to pay for unemployment when the employee has committed some form of misconduct or is otherwise not meeting expectations for their job. In these cases, the law allows employers to protest the application on the grounds of employee misconduct.
Employment Tax Attorney Defense Strategies
Tax issues for businesses can end up destroying the business while leaving many of the main stakeholders holding the bill. A skilled employment tax attorney can ensure that you have a strong defense to the charges, limit your liability, and protect your business.
Solutions for your individual payroll tax issues may include:
- Submitting an Offer in Compromise to reduce your debt or manage arrearages with monthly payments;
- Obtaining a short-term deferral while your business gets back on its feet;
- Negotiating an installment agreement that allows you to pay arrearages over an extended period of time;
- Reviewing your accounts to ensure that the IRS did not make an accounting error when assessing your tax burden;
- Determining whether or not the tax debt is expired or about to expire;
- Negotiating lien releases so that you can obtain loans to pay off taxes;
- Getting the IRS to declare your debt uncollectible;
- Make partial payments that reduce penalties;
- Getting releases from tax levies; and,
- Filing for abatement of interest and penalties.
Filing for bankruptcy will not solve your trust fund tax problems. Even if your business is liquidated in Chapter 7, the IRS can collect the money owed from executives, officers, owners, and sometimes even employees or contractors. You need a payroll tax attorney today.
Talk to an Employment Tax Attorney Today
The employment tax attorneys at Sodowsky Law Firm, PC have helped several individuals and their businesses recover from IRS and state-level tax issues. If your business is currently being audited or otherwise in the IRS’s crosshairs, call a skilled Virginia tax attorney. We can help reduce your liability, negotiate a compromise, and otherwise protect your business and assets from the IRS.