A sanitation and waste hauling company in Salt Lake City carried a payroll tax debt for years. The case did not start cleanly. PFGTAX inherited the file from another team in 2021. Several quarterly returns were still missing. Before anyone could talk about a payment plan, a revenue officer levied the company’s bank account anyway. That levy pulled out money the business needed for payroll and fuel.

How it started

Every employer files a Form 941 four times a year to report payroll taxes withheld from paychecks. Employers also file a Form 940 each year for federal unemployment tax. A sanitation company running trucks and crews racks up plenty of both forms. This one fell behind across a run of quarters between 2017 and early 2022. A revenue officer was already assigned to the file when PFGTAX took it over in 2021. Several returns still had not been filed. The IRS will not calculate a real debt number until the returns exist, so getting the paperwork filed came first. An accountant worked alongside PFGTAX and filed the outstanding returns fairly quickly once the case changed hands. Salt Lake City empties out downtown on winter nights when the Utah Jazz play at the Delta Center. This business was not a file number in Ogden. It was a real local company trying to dig out of a real hole.

The levy that should not have happened

The missing returns were getting filed. The numbers were finally getting straightened out. Then the revenue officer issued a levy on the company’s bank account anyway. A levy lets the IRS reach directly into a bank account or a paycheck to collect what it believes it is owed. It does not need to go to court first. The IRS tied this levy to a request that PFGTAX says it never made and never received. The levy pulled funds the business had set aside to cover its own bills. A sanitation company has to keep trucks fueled and crews paid on a fixed schedule. Losing operating cash without warning is close to an emergency for a business like that.

What we did

PFGTAX filed Form 9423, a Collection Appeal Request. That form lets a taxpayer challenge a specific IRS collection action, like a levy. An appeals officer reviews the challenge instead of the revenue officer who took the action. PFGTAX went through several rounds of back and forth with the revenue officer. We supplied the documentation the IRS asked for. The levy came off in full.

Releasing the levy fixed the immediate crisis. It did not fix the underlying debt. The client’s own compliance slipped again for a stretch after that. New tax deposits fell behind even while the old debt was still being negotiated. The IRS will not seriously discuss a long term resolution with a business that keeps falling further behind in real time, so PFGTAX pushed the client to get current on those ongoing deposits first. Once the filings were complete and current deposits were caught up, PFGTAX built a full financial analysis of what the business could actually afford. We asked the IRS to finalize a resolution based on that number instead of guesswork.

The outcome

The IRS approved a formal installment agreement after months of negotiation. The agreement covered the business’s federal payroll tax debt. That debt had grown to just over $141,000 across more than a dozen quarters of Form 941 and several years of Form 940. The company signed a Form 433-D, which is the IRS’s installment agreement paperwork. The business agreed to pay $775 a month starting in January 2023, due on the 25th of every month after that. The IRS holds off on liens, levies, and seizure as long as the business keeps making those payments and stays current on new deposits. The taxpayer has remained in good standing on the agreement since the IRS approved it.

Why it matters

This case involved two separate problems, and PFGTAX had to solve them in order rather than all at once. Getting the wrongful levy released came first. There was no point negotiating a long term deal while the IRS kept pulling cash out of the business’s account over a request nobody could even confirm existed. Only after that immediate threat went away could PFGTAX turn to the actual debt. Then we could build a case for a payment plan the business could actually sustain.

The other lesson here is about staying compliant while a case moves through negotiation. A business can do everything right on old debt and still put itself back at risk by falling behind on new deposits while the case drags on. The IRS looks at both the past and the present. A resolution has to hold up on both fronts, or it will not hold up at all.

Frequently asked questions

What is an IRS levy, and how is it different from a lien?

A levy is the IRS’s power to take money directly from a bank account, wages, or other assets to satisfy a tax debt. The rules for this power sit in IRC 6331, and IRM 5.11 covers how revenue officers carry it out. A lien works differently. A lien is a legal claim against property that secures the debt, but it does not by itself pull money out of an account. A levy actually removes funds.

What is a Form 9423 Collection Appeal Request, and when can you use it?

Form 9423, the Collection Appeal Request, lets a taxpayer challenge certain IRS collection actions, such as a levy or a lien filing, and ask for review by the IRS Office of Appeals instead of the revenue officer who took the action. It generally has to be filed quickly after the action happens, and it does not pause the broader debt negotiation on its own. It only challenges that one enforcement step.

What is an IRS installment agreement for a business?

A business installment agreement is a formal payment plan that lets a company pay off tax debt in fixed monthly amounts instead of all at once. The rules sit in IRM 5.14, and the agreements are authorized under IRC 6159. The IRS bases the monthly amount on what the business can show it can actually afford after reasonable expenses, so two businesses with similar debt can end up with very different payments.

Do all missing tax returns need to be filed before the IRS will negotiate a resolution?

Yes, generally. The IRS will not seriously negotiate a payment plan, Currently Not Collectible status, or any other resolution until every required return is filed. This is one of the most common reasons a case stalls. Getting current on filings almost always has to come before the IRS will talk about numbers.

What happens if a business misses a payment on its installment agreement?

A missed or late payment can put the agreement into default. Once that happens, the IRS can resume collection action, including liens and levies, without much additional warning. A business on a payment plan also has to stay current on new tax deposits going forward, not just the old debt, or it risks the same default.

Every case is different. Outcomes depend on a taxpayer’s specific financial situation, and PFGTAX does not guarantee any particular result or reduction in tax debt.