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How To Resolve Unreported Payroll Taxes

How To Resolve Unreported Payroll Taxes

Resolving unreported payroll taxes is an extremely important matter that requires proper action and urgent attention. With that in mind, this article will provide a step by step guide to help you resolve unreported payroll taxes.

First identify the unreported payroll taxes

To find any unreported payroll taxes, you first need to go over your financial statements and payroll records. This includes the withholding of federal income tax, FICA taxes for Social Security and Medicare, and FUTA and SUTA taxes for both federal and state unemployment. You need to ensure all applicable taxes are recorded, accurately reflected, and accounted for.

Calculate the Amount You Owed

Determine the total amount of unreported payroll taxes by taking into account both the employer and employee portions. You can do this by going over your payroll records and using the proper tax rates. Make sure to calculate the back taxes due for each tax category accurately.

File the Appropriate Payroll Tax Returns

To report the payroll taxes that were not reported, you will need to prepare and file the appropriate payroll tax returns. Form 941-X (Adjusted Employer's Quarterly Federal Tax Return), for example, is typically filed as amended quarterly payroll tax returns in the US. Consult the appropriate state tax agency to learn the proper forms and procedures for state taxes.

Pay Any Taxes You Owe

Pay the unreported payroll taxes by submitting the payment. It is important that you pay the full amount due if you can. Doing this can help reduce interest and penalties. Consider getting in touch with the IRS to discuss payment options like instalment agreements or an offer in compromise if you are unable to make the full amount due right away.

Address Penalties and Interest

You need to understand that failing to report payroll taxes may subject you to fines and interest charges. Penalties are typically calculated as a percentage of the unpaid taxes, but the IRS will assess them based on the specific circumstances. Furthermore, interest will be charged on the outstanding balances. When making the payment, make sure to take care of these penalties and interest charges.

Communicate with the Tax Authority

Contact the tax authority to let them know about the unreported payroll taxes and your attempts to fix the problem. In the US, this would be the Internal Revenue Service (IRS). You need to be proactive in supplying all required information and supporting evidence to show that you are dedicated to fixing the problem.

Seek Professional Assistance

You might want to consider getting advice from a tax expert who specialises in payroll taxes, such as a certified public accountant (CPA) or tax lawyer. These individuals can assist you in negotiating the dispute resolution procedure, speak on your behalf with the tax authority, and make sure all rules are followed. Their knowledge can be extremely helpful in reducing fines and improving the outcome.

Implement Proper Payroll Procedures

Establish and use proper payroll practices going forward to guarantee accurate payroll tax reporting and payment. Examine and enhance your internal processes for tax calculation and withholding, payroll tax return filing, and timely tax payment. Keep an eye on your payroll procedures frequently to prevent future compliance problems.


Resolving unreported payroll taxes is a process that requires you to be diligent. You also need to coordinate with the tax authorities, and, if necessary, the help of a qualified tax expert. To reduce fines, interest charges, and possible legal repercussions, it is imperative to address the situation as soon as possible.

To prevent similar unresolved payroll tax problems in the future, it is very important that you implement correct payroll procedures. You also need to maintain ongoing compliance. avoiding similar issues in the future.