If you’re running a small business, no matter the services or products you sell, there is no doubt the financial responsibilities are a part of your role. You job handling the financial side of your business includes withholding payroll taxes from employees’ paychecks.
But what happens when – for any reason – you neglect to pay those withheld taxes to the government? Things can escalate quickly, because federal and state tax authorities treat payroll withholding taxes differently from other business debts, and collection actions can be quite aggressive.
If this is the situation you’re in and you live in the DC or Maryland area, it’s probably time to contact a tax lawyer to help.
Defining Tax Withholdings
When it comes to employers, irs.gov says:
“Employers are required by law to withhold employment taxes from their employees. Employment taxes include federal income tax withholding and Social Security and Medicare taxes.”
- Federal income tax withholding
- Social Security and Medicare
- State withholding taxes
It is the employer’s responsibility to remit those withholdings, which, according to the IRS 2026 Employer’s Tax Guide, “There is no wage base limit for Medicare tax. Social security and Medicare taxes apply to the wages of household workers you pay $3,000 or more in cash wages in 2026. Social security and Medicare taxes apply to election workers who are paid $2,500 or more in cash or an equivalent form of compensation in 2026.
Why Does The Government Take These Taxes So Seriously?
Failure to remit these tax withholding funds is considered misuse of trust funds. The IRS will collect unpaid withholding taxes by way of IRS notices, tax liens, levies on bank accounts, wage garnishments, business asset seizures, and/or personal assessments through the Trust Fund Recovery Penalty. In a previously published blog on the latter, we explained:
While TRFP’s aren’t a common, every day occurrence in the grand scheme of businesses in operation, some common scenarios can lead to this issue:
- Cash flow issues leading to delayed payroll tax payments
- Miscommunication in small businesses.
- Errors by third-party payroll providers.
- Failure to stress the importance of oversight and internal controls.
What Are Your Options if You’re Experiencing Small Business Withholding Collections From The IRS?
If the IRS is already contacting you about Small Business Withholding Collections, it’s best to contact an attorney as soon as possible. An experienced lawyer can help navigate those tough and/or uncomfortable communications with the IRS, so you can focus on the growth and success of your small business. Some of the discussions may include:
- Installment agreements
- Negotiating payment plans
- Challenging the Trust Fund Recovery Penalty
- Requesting penalty abatement
- Representation during IRS investigations
Do You Need Help With Your IRS Payroll Tax Debt?
Lead Tax Attorney Michael Lapidus earned an LL.M. in taxation from Georgetown University Law Center, is a member of the bar in DC, Maryland, and Pennsylvania, and has extensive experience in representing taxpayers before the IRS and state tax authorities.
He has also worked in the international tax department of a large international accounting firm. Whether it’s IRS disputes, penalties, back taxes, small business withholding collections, or another tax-related issue, Michael Lapidus will work relentlessly to minimize your financial burden and protect your interests.
Don’t navigate through the complexities of the IRS Payroll Tax Debt alone. Let our The Lapidus Law Firm guide you every step of the way. Call The Lapidus Law Firm at 202 785-5111 to get started.