A Construction Company Clears a Past-Due Payroll Tax Balance With a Direct-Debit Plan
The situation
A construction company from TX had fallen behind on its federal payroll taxes — the income tax, Social Security, and Medicare withheld from employee paychecks (Form 941). The balance was about $2,500. That is a smaller number than many tax problems, but unpaid payroll taxes are the kind the IRS pursues hardest, because that money was withheld from employees and held in trust for the government. Left alone, even a modest balance like this draws penalties, interest, and eventually collection notices that can escalate to a levy on the business bank account.
What we did
PFGTAX dealt with the IRS directly so the owner could keep working. We documented the company’s finances in the format the IRS requires, negotiated the terms of a payment plan, and set it up as a direct debit so a payment would never be missed by accident.
The outcome
The IRS approved an installment agreement — a monthly payment plan that lets a taxpayer pay what it owes over time instead of all at once. The payment was set at $111 per month by automatic withdrawal. As long as the payments are made on time, the returns are filed on time, and no new balance builds up, the IRS holds off on collection action while the agreement is in place.
For a small contractor, the value was less about the dollar amount and more about getting fully back in good standing with the IRS — closing out the balance on terms it could easily handle and removing the risk that a small problem turns into a bigger one.
Why it mattered
The business put a payroll tax balance behind it with a payment it barely had to think about, and kept its focus on the work instead of on the IRS.