The Coronavirus shutdown is going to put a lot of business owners in a bind of monumental proportions. Many of them are striving to keep their employees on even though their revenues are substantially down or even zero. It is time for a new business plan. It’s time to face the problem of what to do if you can’t pay your payroll tax liabilities.
Businesses that are unable to make the required payroll tax deposits and are out of borrowing power have a few simple choices:
- You can downsize the staffing to a level you can afford. This may mean going back to the owner being the only employee. Minimizing your overhead will allow you to get by while exploring other opportunities.
- You can close all together.
- Finally, you can take the biggest risk of all – keep things as they are and hope that things will get better. This approach is what leads a lot of people to a decade of grief. They continue to pay payroll but stop making their payroll deposits.
Going broke owing the IRS for payroll taxes is absolutely the worst mistake you can make. You may think that the liability is the business’s liability and the fact that it is incorporated means you can walk away. Think again. The IRS can and will access a penalty that is equal to the trust funds (taxes withheld from the employees) on anybody that they feel is responsible for not paying them. Every business owner with check signing authority will most likely be considered a responsible person. Here is the disaster -- you cannot get rid of this penalty by filing induvial bankruptcy. The IRS is going to be after you for at least 10 years.
If your cash flow is not cutting it, options 1 and 2 are your best bet. Your life will probably recover in 2 to 5 years and you can mark it up to lessons learned. Failing at option 3 will greatly expand your suffering.
If you or someone you know has received a Notice of Intent to Levy or some other federal or state tax issue, please feel free to contact me at either (352) 317-5692 or email firstname.lastname@example.org .
Cell (352) 317-5692