7 FAQ’s About IRS Employment Taxes

From levies to criminal charges, IRS employment taxes can lead to a variety of negative outcomes. The more you know, the better equipped you’ll be to handle action from the IRS. Detailed below are a few common questions — and answers — about employment tax debt.

  1. Will the IRS target me if I pay annual taxes instead of quarterly taxes?

Self-employment taxes must be paid on a quarterly basis for those taxed more than $500. Failure to pay quarterly taxes may result in late payments and assessed interest, but harsher penalties are rare.

  1. Can the IRS garnish wages for independent contractors?

Levies for independent contractors look very similar to garnished wages for traditionally employed individuals, with the IRS eligible to garnish all 1099 income.

  1. Which forms are necessary for self-employed offers in compromise?

The appropriate forms for offers in compromise differ somewhat based on how income is earned, although all debtors must complete Form 656. Most self-employed individuals (especially sole proprietors and independent contractors) use Form 433-A, which is also standard for traditional employees. Some small business owners are better off using Form 433-B.

  1. What is the tax debt limit for self-employed offers in compromise?

Eligibility for OIC depends on classification. However, there is no ceiling if you owe IRS employment taxes.

  1. Does the IRS accept credit card payments for employment tax debt?

Self-employed individuals unable to achieve offers in compromise or put up the cash for tax debt sometimes turn to low interest credit cards. The IRS accepts credit card payments, but this approach is usually inadvisable.

  1. Will I receive notice of my tax debt?

The IRS is required to send written notice before assessing a levy or lien. Notice cannot be provided via phone or email.

  1. Are self-employed professionals eligible for the IRS Fresh Start program?

The Fresh Start program provides penalty relief for wage earners who experience unemployment, as well as self-employed professionals who suffer at least a 25 percent reduction in annual earnings.

Call Our Office

Are you concerned about your IRS employment tax debt situation? We can help you find relief. Call 720-398-6088 to learn more.