Payroll taxes can be tricky to handle for a business owner. However, they are not something you can afford to make mistakes at. Missing a payroll tax deadline can lead to hefty fines, penalties, and interest charges. Labor laws and tax regulations are quite complex in California, with deadlines that are pretty strict.
This is where the expertise of a Newport Beach accountant can offer ease. Allowing an accountant to oversee and handle payroll taxes ensures that you stay compliant and meet deadlines. Meanwhile, read this article to know the steps you can take when you miss a payroll tax deadline.
Table of Contents
Step #1: Assess the situation.
If you have missed your payroll tax deadline, it is important to examine the situation carefully. You should start by how much time you have delayed and categorize it into days or weeks. After that, make sure to identify the specific types of payroll taxes that you have missed.
This could include federal, state, or local taxes. And finally, collect all the important payroll documents, as they will be helpful for the next steps.
Step #2: Calculate the penalties and interest.
After you have gathered all the necessary payroll documents, calculate the penalties and interest due to the late payroll tax payment. The IRS has imposed a penalty system for late payments. A 2% penalty if the payment is one to five days late, 5% if it is more than five days, and 10% on payments beyond fifteen days.
It is important to know that interest also keeps adding on late payments. In order to calculate the total amount you owe, you can use IRS calculators or consult a tax professional.
Step #3: File the late payment immediately.
It is very important to file the late payment as soon as possible. It helps you avoid further penalties and interest. If you file the payment late, more penalties and interest will keep accumulating. You can make federal tax payments through the Electronic Federal Tax Payment System.
Login to your EFTPS portal with your Employer Identification Number to continue with the payment. Moreover, it is also important to understand the payment options available for state and local taxes, as they can be different from the federal tax payment process.
Step #4: Notify the IRS or tax authority.
After making a late payment, you should notify the IRS or tax authority and explain your situation. Employers can contact IRS authorities via telephone or submit a specific form describing their situation.
Communicating with the IRS about your problem can help you get rid of some penalties. Different states have different rules for dealing with late tax payments. Therefore, It is important to follow these rules to avoid any problems.
Step #5: Request a penalty relief.
In some cases, employers can request a penalty relief. This can help ease some of their financial burden. The IRS provides a First-Time Abatement program where employers can get rid of some penalties if they have a good work record for the past three years.
Employers must show that they have filed their taxes timely in the past years to become eligible for this program. Also, if any unpredictable situation results in your late payments, make sure to gather all the relevant documents to justify your case.
Step #6: Set Up a payment plan (if necessary).
If you are unable to pay all your over taxes at once, it is important to set up a payment plan. You can discuss this with the IRS or local tax authorities to negotiate the payment plans.
However, to become eligible for this plan, you must show these authorities that you are genuinely unable to make the full payment at once due to a financial crisis.
Don’t miss deadlines!
Beyond handling immediate issues, an accountant can offer long-term benefits by helping you stay compliant. Consult with one in Newport Beach, California, today!
