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Can I Get an Installment Agreement for Payroll Tax Debt?

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Can I Get an Installment Agreement for Payroll Tax Debt?

 

We received this in a chat inquiry on our website. The business owner asked if he could set up an installment agreement because he was not able to make the payment for a recent quarter’s payroll taxes. The short answer is YES.  However, this is one of those responses that requires a phone call. Reason, there could be more troubling issues lying under the surface.

 

Was this an isolated incident?

Was this just an isolated incident or does this happen often? If this happens often you will find the IRS less agreeable. Collecting payroll taxes from employee is a fiduciary duty and if the IRS believes you are abusing that privilege, they will take aggressive action. IRS expects you to send in all the collected payroll taxes based on an extremely strict schedule. If you do not, they view it as stealing or borrowing from your employees. These actions come with some extremely high penalties So, the follow-on question must be, has this happened before and how old is the debt?

 

How much time do you need to pay it off?

How much time you need to pay it off will determine if you need a structured Installment Agreement or just pay it off. If you can pay it off in the next couple months then you do not need to contact them, just make regular payments on time every month so they see a pattern. If you need more time, then set up an Installment Agreement.

 

Future payment must be timely.

Remember, even though you are paying off a past due debt, ALL future payment MUST be TIMELY. If you do not do this, you are setting up a pattern of default, which will take this discretion in a completely different direction.

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