Business Tax Problems

Business Tax Problems – Unpaid 941 or Payroll Taxes

Dollar amounts due for Federal income taxes, Social Security taxes, and Medicare taxes are required by Federal Law to be withheld from workers’ paychecks, and per Federal Law employers are required to pay Social Security taxes and Medicare taxes based on the each employee’s paycheck wages.  On form 941 the employer list the number of workers who received wages during a given quarter, the amount of federal income taxes withheld from their paychecks, and they list the total for Medicare and Social Security taxes due including the employees’ share and the employer’s portion.


Employers are required to deposit the monies collected for income tax, Social Security tax, and Medicare tax from employees and Social Security Tax and Medicare tax they are responsible for on a regular basis to the Federal government throughout the entire year.  Depending on their payroll employers are required to make deposits once every two weeks or once a month.  Employers are not allowed to wait to file their return to send the 941 tax money due to the Federal government to the IRS.


Form 941 includes the words “tax return” the name of the form.  Contrary to the way the form name sounds the form itself, Form 941, is not used to by employers to pay or report their federal income taxes due.  Employers file a separate annual tax return to report and pay any federal income tax they may owe.

Business Tax Problems Caused by Unpaid 941 Payroll Taxes

If an employer does not pay the taxes due not only is the employer responsible and liable for the payroll taxes individuals from inside the company can be directly personally assessed the 941 taxes due through the Federal government Trust Fund Recovery Penalty no matter what type of business entity is connected to the taxes due.  Bear in mind the “trust fund portion” is the amount withheld from your employee’s wages for taxes due for federal income tax, social security and medicare.  Essentially you as an employer are withholding this money and holding it in “trust” and are by law supposed to deposit those monies you kept from your employees to the federal government.  If the IRS finds these “trust fund” monies are not being paid they will then do a 4180 interview to figure out who the individuals are that are the responsible parties that failed to deposit the various payroll taxes due.  After the interviews are completed the IRS will send a notice to parties the IRS has made a decision on that owe the “trust fund” 941 monies. The individual(s) are given 60 days from the date of the notice to appeal the assessment.   Once the owners of a business are notified that they have been assessed the “trust fund portion” of the 941 debt and if they have not successful appealed the assessment the IRS can then file liens against the individuals personally plus seize bank accounts and other assets.

What are the Options for your Business if it Owes 941 Income Taxes

On the downside of owing 941 income taxes or if the IRS has requested that you conduct a 4180 interview with them or even worse, if you have personally been assessed the “trust fund portion” of the 941 taxes owed by your company , we advise you to move quickly and get help from a tax professional so you can resolve this issue straight away.

If you owe or your business owes 941 taxes call us today at 505-988-9572