McConnaughy on Tax Resolution (part 2 of 2‪)‬ EverydayCPA Show | Business Owners | Self-Employed | Households | Tax | Budgeting | Savings

Good morning, this is Kelly Coughlin, CEO of Bank Bosun, hope everybody is doing well.
You know, dealing with the IRS for a business or a personal tax resolution can be a challenging endeavor. Today we are going to talk about Business Tax Resolution.  We are going to focus on tax liability resolution, that is, resolution of a business tax liability after the IRS has notified you of an amount due. 
With that, I have on the line, William D. McConnaughy. He is a former IRS Revenue agent, beware, and has a Masters in taxation and is a CPA.  So, he has got insider knowledge about how the IRS personnel think, or don’t think, what pressures they are under and how to work with them successfully.  
Kelly: So, I think, Bill, you are on the line.  Let’s talk about business liability, tax liability. I like things in threes and fives so let’s talk about the top five tax liability categories that you end up working on for businesses or the events that created it. Is it, you know, the long term capital gains and you get this big tax liability?  Is it an audit?  I assume  that employment tax withholding for compensation, that’s one of those things that you can’t do too much with, I would imagine, because that’s one of the most egregious events, right, that’s created but give me like top five things that you work on like for businesses.
William: For businesses, I am not sure if there is five but I’ll list a couple.  First and foremost, far and away, the number one problem is employment taxes, payroll taxes, where the business owner or the business doesn’t turn over withheld payroll taxes to the IRS like they are supposed to, that comes up frequently.   And the reason again is that, there is usually a good reason where the business need that money to take care of unexpected things that come up either within the business or the business owner personally.  It is unpaid payroll taxes that the company withholds from the employees’ wages, they are supposed to turn them over to the government and they don’t, for various reasons.   That’s number one.   Far and away, number two would be the income taxes, company income taxes, but by and large it’s almost always the payroll taxes that’s the troublesome thing, and the reason being is because it is so easy.  I mean, the company is supposed to turn this over every three months because there is a quarterly filing requirement. And it’s very easy because there is nobody there to stop the company or the company owner from just saying to themselves, you know, I need this money right now for other purposes, and that’s what they do with it. So, that’s it, I wouldn’t say there is five but there is certainly the payroll taxes and the income taxes, but payroll, far and away is the bigger problem of the two.   
Kelly: Okay, and on the payroll side let’s focus on that one then, many, many companies outsource payroll to like Quick Books, ADP, you know, a handful of companies that do payroll processing, I know, I am the CEO of a company.  We didn’t see the payroll taxes, we outsourced the entire service.  I never wanted to see that money, just make sure it gets deposited.  Then it got me concerned, I think there are a couple cases I had read about where even if you are using an outside service you better make sure that that outside service, it settles withholdings unto the IRS or they are going to come back and look at you. Is that a fair statement?
William:               That’s absolutely fair, with the payroll services, and as you are mentioning, there are large ones that are nation-wide, and they do a pretty good job of it. I use Paychex, one of two of the largest, they do a pretty good job of it but even they can make honest mistakes so it’s still your responsibility to make sure that those payroll taxes are going in like they are supposed to.  And then there is smaller payroll processing companies that are not so stable or n