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Behind on payroll taxes? You're not alone. The IRS takes payroll tax cases seriously, but you can resolve them through professional representation, strategic planning, and a comprehensive understanding of available relief programs.
Sales tax issues happen when businesses or individuals struggle to understand, calculate, or comply with state and local tax requirements. Unlike income taxes, which are paid directly to the IRS, sales taxes apply to transactions involving tangible personal property, certain taxable services, and, in many cases, digital products. Businesses must collect sales tax from customers and remit it to the appropriate tax authority, but the rules can be complicated.
If you have unfiled tax returns from 2010–2024, your unpaid tax balance can grow quickly—bringing penalties, interest charges, and possible enforcement actions. Our State Individual Unfiled Returns service helps taxpayers resolve missing tax returns and reduce the financial consequences of back taxes. Whether you owe taxes due to a past due return, late filing, or errors in filing tax returns, our experienced tax attorneys and tax professionals can guide you through every step.
A Power of Attorney (POA) is a legal document that authorizes a trusted person—called an agent or attorney-in-fact—to act on a principal’s behalf. This authority may include managing finances, handling real estate transactions, filing tax returns, and making other important decisions. A POA ensures continuity of affairs if the principal cannot act due to illness, absence, or incapacity.
A federal amended return is your official way to correct information on a previously filed federal tax return. Using Form 1040-X, you can amend your original return to fix errors, update income, change your filing status, adjust deductions or credits, and resolve issues that affect your tax liability.
A penalty abatement is a legally authorized process allowing taxpayers—individuals and businesses—to request relief from IRS penalties and state tax penalties through proper documentation and justification of reasonable cause or administrative relief criteria. When properly executed, this tax relief process gives the authority needed to eliminate or reduce failure-to-file penalties, failure-to-pay penalties, accuracy-related penalties, and other penalty assessments without requiring full payment of the original penalty amount. For many taxpayers, penalty abatement is essential to tax compliance resolution, ensuring their financial obligations are manageable even when facing significant penalty accumulations due to unforeseen circumstances, reasonable cause situations, or first-time penalty occurrences.
A Payment Plan is a legally authorized agreement allowing taxpayers—individuals and businesses—to resolve their tax liability through manageable monthly payments rather than requiring immediate full payment of the entire balance due. When properly established, this installment agreement allows taxpayers to maintain compliance while spreading their tax debt over time, protecting bank accounts from levy action, preventing wage garnishment, and avoiding asset seizure while making affordable monthly payments. For many taxpayers, a payment plan is essential to their tax resolution strategy, ensuring their financial obligations remain manageable even when facing significant tax liability, past due amounts, or inability to pay the full balance immediately.
An Offer in Compromise is a settlement option that allows taxpayers to resolve tax liability for less than the total balance owed. The IRS reviews income, assets, and living expenses to decide whether paying in full would cause financial hardship. This compromise overview ensures that taxpayers who cannot realistically meet their obligations can settle for a reduced amount, giving them a chance to move forward.
Late filing increases employment tax liability through additional charges and interest on unpaid balances. The Internal Revenue Service applies a percentage rate monthly, up to a maximum limit, when the return is overdue. Employers may also face costs if tax deposits are missing or delayed. Small business employers can request relief through First-Time Abate or reasonable cause provisions. Accurate records of wages, withheld wages, and deposits help avoid these situations.
Annual employment tax liability includes federal income tax withheld from employee wages, social security tax, and Medicare tax adjustments. Both the employer and employee share of these payroll taxes must be counted. Compensation paid through paychecks, sick pay, or family leave wages is also part of the total annual liability. Employers must calculate carefully, since exceeding $1,000 in yearly liability makes them ineligible for Form 944 and requires quarterly filings instead.
Employers must file Form 944 only when the Internal Revenue Service sends an IRS notice authorizing it. The requirement applies to small business employers whose annual employment tax liability does not exceed $1,000. This threshold includes employer and employee shares of social security tax and Medicare wages. Without written confirmation, most employers must continue using Form 941. Meeting these filing requirements ensures accurate reporting of federal income tax withheld and payroll taxes.
FUTA taxes are paid solely by employers to fund unemployment benefits, while income tax is withheld from employees’ wages and remitted to the federal government. FICA taxes are shared between employers and employees to cover Social Security and Medicare. Understanding these differences ensures payroll tax liability is calculated correctly. Employers who separate FUTA taxable wages from income tax and FICA withholding maintain accurate reporting throughout the calendar year.
Employers are not required to immediately deposit when the FUTA tax liability is less than $500 for a calendar quarter. Instead, the balance carries forward to the next quarter until the total exceeds $500. Any remaining liability must be paid with the annual federal unemployment return. This rule streamlines payroll tax compliance while ensuring the federal government receives the correct total amount each tax year.
Employers who discover mistakes must file an amended return. Corrections may involve adjustments to FUTA taxable wages, prior quarterly payment allocations, or the calculation of tax liability. Filing an amended return provides the Internal Revenue Service (IRS) with accurate payroll tax records and ensures compliance under the Federal Unemployment Tax Act. Businesses should maintain supporting documentation to verify changes and protect against disputes regarding wages paid or liability.
Household employers must file when they pay employees $1,000 or more in cash, such as caregivers or housekeepers, in a calendar quarter. Once this threshold is met, the wages paid are subject to FUTA tax reporting. Filing ensures proper calculation of payroll tax liability under the annual federal unemployment return. Household employers are fully responsible for compliance since employees do not contribute to FUTA taxes.
Agricultural employers must file if they pay $20,000 or more in wages during a calendar quarter or employ 10 or more agricultural employees in at least 20 weeks of the year. Meeting either condition establishes federal unemployment tax liability. Reporting ensures that seasonal and farmworkers receive coverage under the federal unemployment tax act. Employers should maintain detailed payroll tax records to calculate FUTA taxable wages accurately.
The FUTA tax rate is 6.0 percent of the first $7,000 of each employee’s wages. Employers who fully pay state unemployment taxes typically qualify for a credit of up to 5.4 percent, reducing the effective FUTA tax rate to 0.6 percent. This structure allows the federal government to collect unemployment contributions while recognizing payroll tax obligations already satisfied at the state level.
Not all employers must file the annual federal unemployment tax return. Liability begins when wages paid to employees reach $1,500 in a calendar quarter or when one or more employees work for at least 20 weeks. Agricultural employees and household employers follow separate rules. Employers who meet these thresholds must calculate FUTA taxable wages and report liability under the Federal Unemployment Tax Act.
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