I am so depressed.

Last week I received a telephone call from an out-of-town business man. It seems he was the owner and operator of a successful business for many years. Unfortunately, the price of oil collapsed. His customers couldn’t pay him and he couldn’t pay his bills. He delayed paying the IRS hoping for a rebound in oil prices that so far hasn’t come. The IRS closed his business and is after him personally. He is in his 70s, broke, and without hope.

I told him there are a variety of ways to resolve tax problems with the IRS, but I needed more information and would meet with him to go over those alternatives. I asked him to come to El Paso and I would buy his lunch and go over these possible solutions.

He said he was broke, the IRS took everything. He was now living on Social Security and the IRS was threatening to take that as well. He didn’t have money for gas to come to El Paso.

Here’s the Backstory

When an employer pays an employee, it must withhold taxes as well as certain social security, Medicare, and unemployment costs. It must deposit these funds with the IRS quickly, normally within three days. These deposits can be very significant in amount.

Unfortunately, the IRS doesn’t know about unpaid payroll taxes for some time, often after several quarters have passed. By then, the amounts owed have become even more substantial in amount and have been increased by penalties and interest. Employers who were hopeful of a business turnaround are now devastated by the insurmountable tax liability and – almost always – the lack of funds to pay.

But their problems have just begun. The IRS will transfer most of the tax liability to the individuals, who are responsible for the nonpayment. That’s right. The officers, directors, shareholders, employees, and bookkeepers can become personally liable for most of their employers’ unpaid payroll taxes!

Here’s the Future Story:

Last week the Department of Justice announced to the federal bar association that it was making the collection of payroll taxes a top priority in 2016. It seems that 70% of all IRS collections are from 941 taxes and that nearly $60 billion is still owed. The IRS agrees employers are “stealing” money from the IRS.

First, the IRS is going to start suing employers and their individual owners. They will try to get court orders directing delinquent employers to be making timely deposits, and require notice of those deposits to the IRS.  They will tie up the assets of the business so they cannot be assigned or used to pay other creditors. Those who failed to obey these civil orders will be pursued with incarceration.

Second, the IRS has set up staff resources to pursue criminal prosecution against delinquent taxpayers and also those individuals who are responsible for nonpayment. It is training IRS agents and IRS civil attorneys to recognize these cases and refer them for criminal prosecution.

So folks, here’s the deal. If you have not filed or not paid 941 taxes, you are sitting on a ticking time bomb. It can be diffused if you know what to do, how to do it, and when. But you must act quickly.

Get with an attorney experienced in these matters, one who doesn’t advertise on billboards or use an 800 telephone number.

And most of all, don’t be afraid.  The IRS loves fear and preys upon those who suffer from it.