What Happens If I Do Not File or Pay my Payroll Taxes?

Payroll Taxes

When it comes to unpaid taxes, the IRS is a little harsher on corporations than on individuals. Businesses owe more taxes and are more involved in tax administration than individuals. People who owe taxes are treated harshly by the IRS, who consider it a significant infraction and a serious felony. They are unconcerned with an individual’s or a business’s financial situation, whether they have declared bankruptcy or are deeply in debt; all they worry about is that you pay the taxes you owe. Payroll taxes are the most strictly enforced by the IRS of any sort of tax. They are highly concerned about unpaid payroll taxes and have hefty penalties for late payment.

A company that receives payroll taxes from its employees is obligated to pay those taxes on their behalf. If a company fails to pay its taxes, it is considered fraudulent and is dealt with accordingly.

What are Payroll Taxes?

Payroll Taxes

All businesses must submit all accurate information to the IRS, make monthly payments to the federal payroll tax department, and file informational returns. The company is obligated to provide a W-2 Form to all workers and a Form 1099 to any individual contractors so that they may identify how much they were paid and what deductions and bonuses they received. All businesses must also use the IRS-created Electronic Funds Transfer (EFT) system to deposit Medicare and Social Security taxes for their employers and employees. This deposit can be made monthly or semi-weekly and is based on forms from past years, such as Form 941. If your employer has more than $50,000 in tax withholding each year, they must deposit semi-weekly, and those with less than $50,000 in tax withholding must deposit monthly. The IRS will determine the frequency of your deposits, and you will be notified.

Businesses must also pay Federal Unemployment Tax Act (FUTA) tax each quarter if their total salaries paid for the quarter exceeded $1,500. In terms of all the forms and their functions, Form 940 is used to report your FUTA tax. Other forms include Form 941 or Form 944.  On a quarterly basis, Form 941 is used to report employee wages, employer withholdings, and Medicare and Social Security taxes. Form 944 is the same as Form 940, however, it is reserved for employers with annual tax withholding of less than $1,000 per year.

What happens when a business fails to pay or file its Payroll Taxes?

When a company fails to pay its taxes, particularly its payroll taxes, it is not a minor issue. Many firms get into financial difficulties and are forced to postpone paying their taxes. This results in a failure to submit a penalty of 5% every month, with a maximum penalty of 25%. Other steps that the IRS could take include levying or enforcing a levy or lien on the bank accounts of businesses or individuals.

How to Solve this Problem?

This is a significant situation that might be difficult to handle. The first step you could take is, of course, to pay your taxes if you can find the money, but if you can’t, here’s what you need to do. If it is completely difficult for you to pay your taxes, you can request extensions. The IRS is often able to be patient and provide you with a time period and a plan for paying these taxes. If you are unable to do so, do not wait for the IRS to come knocking on your door; instead, get assistance. Seek expert assistance from a Miami Tax Accountant who has dealt with similar issues and assisted individuals and organizations in dealing with them efficiently.

Any form of tax problem necessitates the assistance of a professional. Allow the pros to handle the process of owing payroll services, which can be difficult and intimidating. We can assist you in sorting through your options and determining the best solution and payment plan for you. Our team consists of Tax Preparers in Miami who have been dealing with issues like these for years and have solved them effectively. Be a part of our happy clients and let us take care of all your tax concerns.

All you have to do is reach out to us; you can email us at admin@sdgaccountant.com or call us: +1 (786) 706-5905.

Failing To File Taxes

File Taxes

The Internal Revenue Service (IRS) is quite strict when it comes to employers/businesses failing to pay or even file taxes. There is no financial scenario that exempts you from paying taxes, and this is regarded as a significant infringement. Here is what happens if you do not file/pay your taxes, what you can do to avoid penalties, and how we can help.

What Can Happen If You Do Not File Your Taxes?

Every American is required to file taxes each year before the due date, even if they have not earned an income. There could always be additional taxes that need to be paid or a refund they are entitled to for taxes paid during the year.

If an American fails to file their taxes on time for the fiscal year, they may face substantial consequences. Assume you are that American, and your tax filing deadline was April 15, 2021. If you did not file your taxes for whatever reason and it is already June, you will be charged a failure-to-file penalty. The failure-to-file penalty is 5% of the unpaid tax for each month or partial month the return is late, with a maximum penalty of 25%. Remember that if your tax return is more than 60 days late, you may be charged a minimum of $435. The minimum penalty is $435, or 100% of the tax due on the return, whichever is lesser.

What Can You Do?

Even if you are unable to pay, you should always submit your taxes to avoid penalties and interest. Filing your taxes will spare you some fines as well as the loss of a potential return. Penalties for failing to pay are lower than failing-to-file so you need to file your taxes. If you are unable to pay, you can request an extension, which provides you with an extra six months to save and file your taxes. However, the extension must be filed before the due date, or you may be charged with a failure-to-file penalty.

What If You Fail to Pay Your Taxes After Filing Them?

If you do not pay your taxes after filing them on time, the IRS might charge you a failure-to-pay penalty. For the failure-to-pay penalty, you are fined 0.5 percent of your unpaid taxes for each month you do not pay, up to a maximum of 25%. Unpaid taxes also accumulate interest at the federal short-term rate plus 3%. Interest begins to accrue the day after your taxes are due and continues to compound daily until the debt is paid in full. Keep in mind that if you are charged both failure-to-file and failure-to-pay penalties, your total monthly interest cannot exceed 5%.

What Should You Do?

Do not be worried if you have unpaid taxes and have been charged penalties! You still have time to fix this! The first thing you should aim to do is pay as much of your taxes as possible before interest begins to accrue.

If you don’t think you’ll be able to pay your taxes on time, contact the IRS. They will do everything they can to assist you. They can help you figure out the best approach to pay your taxes while meeting your obligations.

How Can We Help?

SDG Accountants is one of the best accounting firms in Miami; we have many consultants that can provide you with the best guidance and lead you through the best solution in dealing with the IRS. When dealing with tax issues, you will need the assistance of an expert. You need a consultant who can represent you to the IRS and potentially identify a simpler way for you to pay your taxes. Our Miami Tax Accountant can assist you in negotiating payment terms and lowering your taxes to an amount you can afford.