Small businesses are weighed down with a bevy of taxes (and soon they will face changing overtime policies, too). For every employee, businesses have payroll taxes that are paid throughout the year (rather than just on April 15). But what happens if you get behind and can’t pay? Or what if your business goes under? Read on to learn more about employer taxes and payroll tax debt relief.
What are Payroll Taxes?
Payroll taxes are funds paid by employers that go toward services like Medicare and Social Security. At present, the 2016 Social Security tax is 6.2% of the first $118,500 earned by an employee, and the Medicare tax is 1.45% of an employee’s entire annual salary. These taxes are calculated by the employer and, ideally, paid to the IRS each pay period or every month. (You can check out the exact IRS payment schedule here).
When Do Tax Problems Usually Arise?
Basically, problems occur when employers fail to pay or underpay their portion of payroll taxes.
There are several ways this type of tax debt happens. For some business owners, improper accounting can lead to under or missed payments. For others, it may relate more to an inability to pay. For instance, small businesses may experience a slump in sales or they could expand too quickly, thinning their profit margin. Both cases could result in unpaid taxes and the need for payroll tax debt relief.
How Can Business Owners Obtain Payroll Tax Debt Relief?
Employers facing payroll tax debt have a few options available to them.
- Installment Agreement (this allows employers to make payments on tax debt rather than paying in one lump sum)
- Offer in Compromise (this lets employers settle tax debt for a lower amount than owed)
- Currently Not Collectible (this option is available to small businesses and owners who have no way of making monthly payments)
How can I get started on my payroll tax debt relief?
Because of the complexities of payroll taxes and the IRS, it is recommended that employers in need seek out qualified help for this type of debt relief. Direct Tax Relief specializes in tax debt help for small businesses and the self-employed. To learn more about our A+ rating with the BBB or our excellent reviews, give us a call at 1-877-505-4829.
Need more information about tax debt? Check out our Tax Relief Tips.