What Are 941 Payroll Taxes? How Do you Send them to IRS?

The 941 blog is devoted to businesses who fall behind on their 941 payroll taxes. But what are 941 payroll taxes and what purpose do they serve?

If you are a business who decides to have employees, you will be obligated to pay their 941 payroll taxes which means:

1. You withhold their Federal Taxes from their paychecks and send them to the U.S. Treasury on their behalf. You are essentially the "conduit" of this money to the IRS (you don't have to pay anything just send the employee's money to IRS on their behalf).

2. As the employer, you will pay 7.65% of their salary towards their Social Security and Medicare Taxes. This amount is really the "payroll taxes." (The employee themselves pays the other 7.65%). 

3. The totals of the #1 and #2 are sent together as payroll taxes to the U.S. Treasury.

When you become a business and plan to have employees, you'll get an Employee Identification Number (EIN#) HERE. This EIN will also help you get a bank account and legitimize yourself. 

Going forward, the easiest way to pay your 941 payroll taxes is by signing up to make the payments at Electronic Federal Tax Payment System (EFTPS.COM).

Have you fallen behind on payroll taxes? EMAIL us a description of your tax issue HERE and we'll contact you!

Defaulting your IRS payment plan on 941's? Receive a Default Notice? What's Next?

If you had previously negotiated an installment agreement on 941's with the IRS and then either 1. Stopped making payments or 2. Filed a 941 form late or 3. failed to make current 941 deposits then you may very likely be in DEFAULT of your agreement as demonstrated by receiving this CP523-default notice. Is this really the end of the world? Not even close. This default notice will show you that your business has 90 days to get your act together before the IRS levies you (or the IRS assigns a Revenue Officer to your case). 

What do you do in those 90 days? File the 941 forms that are unfiled and STAY CURRENT on your CURRENT payroll meaning: the CURRENT month not the old 941's. When you and your accountant go back to the IRS in the next 90 days, you will be in a better position and have extra leverage. So...use the 90 days to get back into shape, enjoy the lull in back tax payments and stay current on your current month's tax issues. 

If you defaulted on your back tax agreement, staying current on 941's is the most important thing you can do while also contacting the experts at Washington Tax Services at 1-888-282-4697.. You can also EMAIL us a description of your tax issue HERE and we'll contact you by email/phone! 

If you owe 941 payroll taxes and a tax lien is filed, you'll being hearing from...

In the nearly 30 years that our company, Washington Tax Services, has been around, we get many calls from businesses that owe 941 payroll taxes. These clients often get into touch with us via our other Blog which has posted frequently about 941 tax resolution and particularly about the "cold calling of tax liens" phenomenon.

AS anyone who owes 941 taxes knows, the filing of a tax lien will prompt phone calls from telemarketers based largely in Colorado. While the legality of the calls is questionable as the following blog post makes clearly: Cold Calling Tax Liens Legal? - just as importantly, what do these tax relief companies charge? Let's illustrate this thru a recent case example.

At the end of September 2016, we heard from a consultancy in Virginia that owed about $100,000 in unpaid 941 payroll taxes.  This debt was large enough to trigger a tax lien and calls from cold calling tax relief firms.

1. One company, a reputable one in Oregon, charged $10,000 to represent them.

2. Another firm in Southern California, offered to take on her case for a $20,000 fee.

3. We took on the case for $2750.00 - start to finish.

What kind of outcome would this client expect?

Well $50,000 of her debt was for 940 taxes (annual taxes) - returns the IRS had filed for her.  These were easy to fix. Replacing the returns the IRS filed for them - should reduce these to about $5,000.

Finally the other $50,000 in quarterly 941's looked fairly easy to deal with as well. This customer was looking to dissolve her business. We would direct the IRS to focus on the "Trust Fund" amount of the taxes (40% of the debt) - bringing the debt down to about $20,000 - this is possible when a business is looking to close.

So...client should see their debt go from $100k to $25k with our help. We thought $2750 was an appropriate value for our time. We even explained to the client our strategy up-front. The other firms were vague and just pressed the fear buttons in the client to get their bigger fees.

Have a 941 tax issue? Want a second opinion and less expensive option? Call Washington Tax Services now at 1-888-282-4697 or EMAIL us an explanation of your tax issue HERE and we'll contact you.  

The 3-Year Personal Assessment Rule on 941 Taxes, Case Example

AS we wrote a few posts back, if you have a Corporation, Multiple Member LLC or Partnership and you owe 941 taxes, you can avoid personal assessment of these taxes against you if you can run out a three year clock. A recent case of ours illustrates how one individual avoided being assessed the trust fund taxes on about $250,000 in 941 taxes.

This individual in Minnesota contacted us originally in February of 2012. This client was audited on his 941's and we represented him on that case. Once the business was assessed 941 taxes, we told the customer that if he was very lucky maybe the three year clock would pass and he wouldn't be personally assessed (!).

When he contacted us again in the fall of 2015, we were glad to report that the Statute to collect the 941 tax against him had expired. The IRS agent assigned to his case conceded so. The client just paid off his most current taxes, dissolved his company, and essentially walked away from a quarter million dollars in payroll tax.

Not everyone will get this lucky. But if you do owe old 941 back taxes, it is an important consideration if you are one of the entities above (Sole props are the exception to this rule).

Washington Tax Services is approaching its 30th year of assisting tax problem clients. Call us at 1-888-282-4697 to discuss your 941 tax or other tax issue or EMAIL us a description of your tax issue HERE and we'll contact you. 

How Does the IRS make 941 - Substitute for Returns? Pretty Easy: Using your W2's.

If you are a business that has forgotten to file your 941's, the IRS sometimes might file them for you. They file these Substitute for Returns(SFR's) by collecting your W3 information which summarizes your employee's W2's, info which is found at the SSA. The IRS usually get the amounts correct.  But you certainly can refile the 941's to replace the "SFR's."

What if you didn't file W2's either? Well - that definitely is a situation where you will benefit calling watax.com. In almost all circumstances, you want to file the W2's - you owe it to your employees who had paid into the system for themselves. But there's a lot of issues to discuss - particularly when your business is closed or closing, etc.

Washington Tax Services, 26 years in business solves 941 issues. All kinds - no matter how ugly or complex. Please EMAIL us a description of your tax issue HERE and we'll contact you or call us at 1-888-282-4697 - Monday to Friday and our experts will discuss your 941 issues with you. 

If you have a Tax Lien Against your Business, What's Next? Depends on Your Business...Primarily.

As we have written in previous posts on the 941 Tax Problem Blog, if your business has a large enough 941 debt - you'll probably be getting a call from one or several telemarketers in Colorado. Many of the companies are legit - maybe pricy - but several of them have logged some time in the field of representing taxpayers. Nonetheless, if a tax lien has been placed on your business, it's safe to say it's game on - the IRS has selected you as a company that they are going to pursue.

In the most simple terms, the resolution of your 941 tax problem is going to be dependent on the direction your company will take:

Will your business ...

1. Grow? 
2. Tread water? 
3. Or tank?

Your business is growing? If your business is going to grow and whatever happened before was just a hitch, then you are likely going to be set up into a PAYMENT plan and have a chance to WAIVE penalties on the back end.

Your business is treading water? If you are surviving - paying current payroll taxes and normal business expenses and not much else, then you might just hit the sweet-spot of settling the debt thru Offer in Compromise or having case closed as Uncollectible.

Your business is tanking? If you are business can't be helped, it might be time to consider DISSOLUTION and the positive ramifications that might have your 941 tax problem.

Washington Tax Services and it's knowledgeable consultants is ready to discuss the nuances of your 941 tax problem and offer a solution to your tax problem.  Call us at 1-888-282-4697 or email us your tax situation HERE and we'll call you.

Welcome to the 941 Tax Problem Resolution Blog: Overview of Site

If you are a business that has fallen behind on 941 payroll taxes, you might have stumbled upon our 941 Tax Problem Blog today. Here's an overview of what this site has to offer:

STAYING OPEN with 941 tax issue

If your business has just had a "speedbump" in business and you have every intention to keep your business OPEN: you might consider an Offer in Compromise on your 941's. If you have burned a lot of bridges with the IRS - but think you can get back on track - you might look at Avoiding being Shutdown. And finally: if your business is solvent: here's an overview of your options: 941 tax problems in a nutshell

CLOSING THE ENTITY WITH 941 tax issue OR DEALING WITH AN OLD DEBT

If you are OK with your "entity" going away - you have to consider the benefits of dissolution on your tax debt:  Dissolution of Entity with 941's - the Benefits. What if you want to dissolve and you have ASSETS? Here's some answers:  Dissolving a Company with Assets. As the IRS has three years to assess you personally for a 941 debt (corporation, LLC, partnership only) , you have to consider your exposure: Is the IRS pursuing a ghost?

Nonetheless, the staff of Washington Tax Services has been handling 941 tax problems for over 25 years. Have us troubleshoot your tax problem by calling 1-888-282-4697 or EMAIL us HERE and we'll contact you!