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Applying for Payroll Tax Delinquency

Applying for Payroll Tax Delinquency

Payroll taxes are a vital part of any business, serving as the financial lifeblood that supports essential programs like Social Security and Medicare. However, circumstances can arise where a business falls behind on its payroll tax obligations, leading to a payroll tax delinquency. In such situations, it's crucial to understand the steps for applying for payroll tax delinquency relief. In this article, we will guide you through the process to help you address this issue effectively.

What is Payroll Tax Delinquency?

Payroll tax delinquency occurs when a business fails to meet its federal payroll tax obligations. This typically involves withholding and paying Social Security, Medicare, and income taxes from employee wages. When a business falls behind on these payments, it can lead to serious financial and legal consequences.

Recognizing the Signs of Payroll Tax Delinquency

Before we delve into the relief process, it's essential to recognize the signs of payroll tax delinquency within a business:

  1. Frequent Late Payments:

Consistently making late payroll tax deposits or payments to the IRS is a red flag.

  1. Accumulating Penalties and Interest

Unpaid payroll taxes accrue penalties and interest over time. If you notice these charges piling up, it's a sign of delinquency.

  1. IRS Notices

The IRS will send notices if they believe your business has payroll tax delinquencies. Ignoring these notices can lead to further issues.

  1. Cash Flow Problems

If your business is experiencing cash flow problems and you're struggling to make payroll tax payments, it's time to address the issue.

Steps to Apply for Payroll Tax Delinquency Relief

If your business is facing payroll tax delinquency, here are the steps to apply for relief:

  1. Contact the IRS

The first and most crucial step is to contact the IRS as soon as you realise you have a problem. Ignoring the issue will only make it worse. You can contact the IRS through the Business Taxpayer Hotline or by visiting your local IRS office.

  1. Assess Your Situation

Before contacting the IRS, assess your financial situation. Understand the total amount owed, including penalties and interest, and determine your ability to pay. This information will be essential when discussing potential relief options.

  1. Request a Payment Plan

If your business can't pay the entire delinquent amount at once, request a payment plan with the IRS. You can do this through an Online Payment Agreement application or by filling out Form 9465. The IRS may grant you an instalment agreement, allowing you to pay the delinquent amount over time.

  1. Explore Offer in Compromise (OIC)

In certain cases, if your business is experiencing severe financial hardship, the IRS may accept an Offer in Compromise. This involves negotiating a reduced settlement amount. However, OICs are challenging to obtain, and you must meet specific criteria.

  1. Understand Trust Fund Recovery Penalty (TFRP)

If your business has unpaid payroll taxes that were withheld from employee wages (trust fund taxes), the IRS may assess a Trust Fund Recovery Penalty (TFRP) against responsible individuals within the company. You can appeal the TFRP assessment if you believe it was made in error.

  1. Keep Up with Future Tax Obligations

Once you've arranged a payment plan or received relief, it's essential to remain current with your ongoing payroll tax obligations. Failure to do so can lead to further penalties and complications.

  1. Seek Professional Guidance

Navigating payroll tax delinquency and relief options can be complex. It's often wise to consult with a tax professional or attorney who specialises in tax matters. They can help you understand your rights and options.


Dealing with payroll tax delinquency can be a stressful and challenging process for businesses. By contacting the IRS, assessing your situation, and exploring relief options like payment plans and Offers in Compromise, you can work towards resolving your payroll tax delinquency and mitigating the financial and legal consequences.