Dodge the federal payroll tax bullet

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in Small Business Tax,Small Business Tax Deduction Strategies

If your small business owes federal payroll taxes to the IRS and you’re still under the gun, don’t despair. The IRS doesn’t want you to shoot yourself in the foot.

Strategy: Apply for special IRS relief. With an In-Business Trust Fund Express Installment Agree­­ment (IBTF-Express IA), you make reasonable monthly payments that will reduce your debt. At the same time, you can cut back or even eliminate the penalties and interest you owe. What’s more, if you participate in this program, there’s no fee for setting up an installment agreement if you pay your tax bill in full.

Here’s the whole story: Small businesses with current employees can benefit from an IBTF-Express IA. These installment agreements generally don’t require a financial statement or financial verification as part of the application process. To qualify, you must meet the following requirements:

  • You owe $25,000 or less at the time the agreement is established. If you owe more than $25,000, you can pay down the liability before entering into the agreement so you may qualify for relief.
  • The debt must be fully paid within 24 months or prior to the Collection Statute Expiration Date (CSED), whichever is earlier.
  • You must enroll in a Direct Debit installment agreement (DDIA) if the amount you owe is between $10,000 and $25,000.
  • You must be compliant with all filing and payment requirements.

It’s easy to apply. You have three options.

  1. Call the number on your payroll tax bill or (800) 829-4933.
  2. Visit your local IRS office.
  3. Complete IRS Form 9465, Installment Agree­­ment Request, and send it to the address on your bill. If you don’t have a bill, send the form to the ad­­dress on page 2 of the instructions for Form 9465.

Online Resource: Find Form 9465 at the IRS website.

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