Tax Relief Blog
As the owner of a Los Angeles business that employs one or 10,000 employees you are required by law to collect, report and send the payroll and employment tax for each of them. The IRS has a specific 941 form that must be sent in every quarter and must follow a very specific schedule. The only deviation that is acceptable is if the day it is due falls on a Saturday, Sunday or holiday, if this occurs, you must have it sent in on the following business day.
What is meant by Business 941 Payroll, or Employment Tax?
While most Angelenos in Southern California know exactly what income tax is that is withheld from each of their checks, but it is not as likely that these same people would have any idea what is meant by payroll tax. However, ask any Los Angeles business owner the same question they will absolutely be able to tell you that it refers to as 941/940 Employment Payroll Tax.
They are quite aware that 941/940 Employment Payroll Tax refers to the combination of employment tax, social security tax, and Medicare Tax. These taxes are collected from each employee and they must be reported and sent to the IRS quarterly and it must adhere to a strict, specific schedule. If you make it a habit of missing deadlines for submitting the 941 payroll tax form you can be sure that the IRS will not forget and you will likely find yourself on the wrong side of its wrath.
Get a free case case evaluation today 877-788-2937.
Back Unpaid Employment Payroll Tax Debt Help
Due to this very unique structured payment schedule, it is not surprising that a business could find itself in debt due to missed employment payroll tax payments. If you do it to often you will likely find out how seriously the IRS takes unpaid 941 employment payroll tax payment. One of the biggest reasons for a business to owe back payroll taxes is because of the penalties and interest on the outstanding balance in your businesses account.
If you thought the IRS was tough on individuals who owe back taxes, that is absolutely nothing compared to the harsh penalties that they are able to levy against any business that fails to keep up with its payroll tax obligations.
The average weekly wage in Los Angeles is $1,252 and in Orange County its $1,258. Unemployment rate for Los Angeles is 5.1% and for Orange County its 3.1%. Total compensation cost for the Los Angeles employer averages $38.77 per hour, with a California labor force of 19,385,400 employed. Los Angeles county has an average of 1,146,701 companies led by revenues: the Wholesale trade of $199,804,798,000, then Manufacturing of $163,829,606,000, then Retail of $121,389,378,000, then Healthcare industry of $67,261,267,000 in revenues.
Prohibited levy
In addition to the pre-levy steps required in section 6331(j) and the prohibition on uneconomical levies provided in section 6331(f ), Congress has added to the Code through the various Taxpayer Bill of Rights enactments several other restrictions related to seizures. These provisions generally do not apply if the IRS determines that jeopardy exists. First, TBOR1 added section 6331(g) which prohibits the Service from seizing property on days on which the taxpayer was required to appear in response to a summons. Revenue Officers had learned over the years that they could use their summons authority to bring the taxpayer into their office. Bringing the taxpayer into the office through use of a summons allowed the service of the levy form on the taxpayer while the taxpayer was in the IRS office or, in the case of taxpayers with potential violent tendencies, allowed seizure of property in taxpayer’s absence without fear of action by the taxpayer. Revenue Reform Act of 1998 (RRA 1998 or TBOR3) added section 6331(i) which prohibits the IRS from seizing property while a suit for recovery of a divisible tax exists in federal court. Divisible suits are usually suits to recover employment taxes. Most refund suits require full payment under the Flora rule but employment tax refunds suits are permitted with the payment of the employment taxes withheld from one employee rather than the full amount of the tax. Section 6331(k)(1), also added in 1998, prohibits levy of any kind while an offer in compromise is pending and for 30 days thereafter. Section 6331(k)(2) prohibits levy of any kind while an offer to enter into an installment agreement is pending or an installment agreement itself and for 30 days thereafter.
Penalties for Failing to Pay Employment Payroll taxes
Since the IRS is responsible for the collection of all taxes owed to the Federal Government and it derives its authorities and powers from the IRC or Internal Revenue Code. One of the powers that it possesses is to levy penalties for the failure of any business to keep up with its employment payroll tax obligation.
The actual monetary penalties are rather severe in nature and amount to 2% up to 10% for failing to properly pay Federal Payroll Taxes. Failing to regularly pay Federal Income and Social Security Tax on time can end up costing you and your business up to 100%.
Employment 941/940 Payroll Taxes are a necessary evil in order for the Federal Government to continue to operate as needs of the people. However, they require the help of the businesses to do the withholding and paying of the funds that are collected to the IRS after they are all collected on a regular basis.
The IRS can levy your customers, accounts receivable, bank accounts and other sources.
Don’t let the IRS ruin your business, call us now at 877-788-2937.
Our boutique tax representation firm led by Mike Habib serves businesses in greater Los Angeles, Santa Monica, Beverly Hills, Whittier, Pasadena, Lancaster, Long Beach, Santa Ana, Irvine, Newport Beach, Orange County, Inland Empire, San Bernardino, Upland, Claremont, Rancho Cucamonga, Fontana, Ontario, Corona, Riverside, we offer the best nationwide unpaid 941 employment defense service.
