Top Unfiled & Payroll Tax Lawyer New York: Why Tax Problems Get Worse When They Are Ignored

 Nobody wakes up intending to not file their taxes.

A business owner may be encountering cash flow issues. An independent contractor may have had an off year. A business may discover their payroll tax liability has suddenly expanded beyond what they can readily manage. More often than not, the tax problem began with good intentions and a promise to catch up.

Unfortunately, the catch-up often happens much sooner than one realizes.

What started as one late filing becomes two, then three unfiled tax returns New York. What started as a payroll tax deposit delay of a few weeks becomes a few months. Then, the IRS starts to send letters; the State of New York will soon follow. In what seems like a very short period, what once appeared as a manageable financial concern has escalated to a full-blown tax and legal problem.

This is where many taxpayers start looking for a Top Unfiled & Payroll Tax Lawyer New York. Unfiled tax returns and payroll tax debts are two of the most common causes of aggressive IRS and state tax enforcement actions. Understanding why they are problems is half the battle of resolving them effectively.

Unfiled Tax Returns are a Serious Liability

The vast majority of taxpayers assume that because they haven't filed a tax return the government doesn't know what it can collect from them. This is a commonly held misconception. The government receives information about the majority of its citizens, especially regarding earnings and tax withholding, from third parties throughout the year. An employer's W-2 filing or client payment reporting often triggers sufficient information for the IRS to estimate your tax liability.

Often, the government will prepare a "Substitute for Return" for you. These Substitute for Returns (SRFs) seldom favor the taxpayer. There are no itemized deductions or business write-offs reported on an SRF, as the IRS likely does not have information on the items that could legitimately reduce your tax obligation. This can result in a tax liability far exceeding the actual tax owed.

For many taxpayers that call an unfiled tax returns attorney New York or unfiled tax returns lawyer New York they will learn that properly filing unfiled tax returns can reduce their overall liability, sometimes drastically. The longer tax returns remain unfiled the more complex they are to address.

Payroll Tax Problems Grow Quickly

A significant difference between a payroll tax problem and other tax issues is the level of personal responsibility associated with business owners' employment tax obligations. Payroll tax deposits are known as "trust fund taxes", meaning they are collected by employers and kept on behalf of employees and remitted by the employers to the taxing authorities.

Since it is essential that employees be paid on time and that these funds be taxed on a timely basis, the IRS and the states usually react very promptly when payroll tax deposits are not made. Revenue Officers often get involved directly in payroll tax collections because of their trust fund nature. As such, a business may not only be facing interest and penalties but also potentially more aggressive collections from government agents.

Many owners fail to realize that they can be held personally liable for unpaid payroll taxes in some cases. This happens because the IRS or state will look into who had knowledge of and authority over company finances. They may then choose to attempt to hold any owners or managers that meet the criteria personally liable for the outstanding tax.

This is another reason many seek advice from a payroll tax attorney, payroll tax audit attorney, or payroll tax lawyer New York at the first sign of trouble. If you are searching for a payroll tax attorney near me, connecting with an experienced best payroll tax lawyer New York early can make all the difference.

How Small Problems Become Tax Controversies

More often than not, tax problems will cross paths and snowball into multiple tax issues. A business owner with a payroll tax problem may also have corporate returns that are unfiled. Or an owner who is having trouble making business tax payments might not be filing their personal tax returns either.

The most common way a small tax issue can blow up is from financial hardships and delayed payments. Let's say an owner had several very rough business years and fell behind in making payroll tax payments, pushing off the task of getting the books organized so corporate tax returns could be filed.

As this cycle continues, the taxpayer can accumulate several years of unfiled corporate returns as well as outstanding payroll tax liabilities, numerous IRS collection letters, multiple New York State notices, potential IRS audits, all while accruing more interest and penalties. Once the problem reaches this level, the taxpayer will have a much more substantial tax controversy than they originally thought. At this stage, consulting a New York tax defense attorney or even a best tax attorney in New York becomes critically important.

Fortunately, more options often exist for taxpayers than they are aware of if they address their problems early on.

IRS Collection Actions Intensify

The IRS does not usually start with the more aggressive enforcement tools. Most clients seeking a New York tax lawyer from a Top Unfiled & Payroll Tax Lawyer New York will have first encountered some level of IRS notice before searching for representation.

When you ignore or fail to address IRS notices, collections often intensify.

Federal Tax Liens

This is a legal claim filed by the IRS on any and all of the taxpayer's property: real estate, personal property and financial assets. This type of lien affects how you can borrow, sell or refinance your business interests and property.

Bank Levies

If a taxpayer has not complied with Notices, a levy may be sent to the taxpayer's bank to pay amounts due into a government account instead of directly to the taxpayer.

Wage Garnishments

An employer can be sent a notice requiring a certain percentage of employee income be withheld and paid directly to the government. Taxpayers that reach this stage often will start looking for IRS wage garnishment attorneys or a criminal tax attorney near me to help navigate these serious enforcement actions.

Ongoing Penalties and Interest

Even without direct IRS enforcement actions, a taxpayer's balance will continue to grow. Penalties are charged on underpayments and unpaid taxes, and interest continues to accrue on both the unpaid balance and accrued penalties.

Audits Can Be a Consequence of Tax Reporting Issues

Taxing authorities are often aware that unreported income can lead to higher tax burdens. As such, a failure to file or unreported income may trigger the IRS to want further information.

It is important to note that being selected for an audit does not automatically indicate fraud or wrongdoing. Generally, an audit involves a verification process, but often a Revenue Officer may uncover other non-reporting of income and other financial and reporting issues that the taxpayer may not even be aware of, such as business expenses that should not have been reported, miscalculated deductions and credits, payroll tax deficiencies and in some cases, sales tax and other forms of reporting non-compliance. In more serious situations, a tax evasion attorney NYC, best criminal tax attorney, or criminal tax lawyers near me may be needed to protect your rights. Businesses that face serious scrutiny may also require a tax fraud law firm with experience handling complex IRS matters.

For clients facing IRS audit notices and who are unaware how to respond to a Revenue Officer, often the need of an income tax audit lawyer in New York arises.

Sales Tax Audits Often Come Hand-in-Hand

Most businesses have sales tax obligations. Many business owners with payroll tax issues discover sales tax is another reporting and tax challenge they face as well.

This may arise if there has been a business owner that has had business and/or personal finances become commingled, especially with business growth and/or a transition in how a business handles its accounting practices.

Sales tax audits can result in a significant tax assessment and penalties if the business has failed to report and pay the appropriate sales tax on its taxable sales over a period of time. A sales tax audit lawyer New York is often the answer for a business owner looking to address this tax challenge.

The combination of payroll tax problems, sales tax non-compliance, and/or unfiled tax returns, can result in a substantial overall tax exposure.

Frequently Asked Questions

Can the IRS Go After Me if I Have Multiple Years of Unfiled Tax Returns?

Yes. Even if you haven't filed a tax return in several years, the IRS can assess taxes, penalties, and interest for these tax years. The sooner the problem of unfiled returns is addressed, the better.

What Happens if My Business Owes Back Taxes in the Form of Payroll Taxes?

Unpaid payroll taxes may lead to a collection action by the IRS and potentially other consequences such as an audit or personal liability for those who are responsible for managing the business's tax filings.

Can the IRS Garnish My Wages for Taxes I Owe?

Yes. If you are unable to resolve your tax debt, the IRS can seize portions of your wages by garnishing them. However, options exist that can help you stop wage garnishment or limit its impact.

When Do I Need to Call a New York Tax Attorney?

The time to contact a New York tax attorney is once you've received an IRS notice, your business is subject to a tax audit, you haven't filed taxes in years, or your business owes back payroll taxes. Getting professional assistance quickly increases your chances of favorable resolution.

Conclusion

Unfiled taxes and payroll tax issues can never solve themselves; they will only lead to greater financial problems and IRS or state collection efforts down the line. An issue of this magnitude, when it starts as an early cash flow crisis, may morph into a much more serious legal situation, including but not limited to IRS audits, wage garnishments and other more intrusive enforcement actions. Whether it involves several years of unfiled tax returns or payroll tax issues your business owes back on, you should consult with a New York tax attorney today. When your tax problems could jeopardize your financial future, expert legal help from a best tax attorney in New York such as the ones found at Thorgood Law, P.C. can help individuals and businesses like yours overcome these obstacles and get your life back on the right path.