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Tax debt help for business owners

Payroll tax debt can become yours.

Bakery owner pulling a tray of bread from an oven at dawn
Updated October 8, 20265 sourcesFact checked
36.2 millionAbout 36.2 million small businesses in the US (36,207,130) (2026 edition)Source: SBA Office of Advocacy: Frequently Asked Questions About Small Business, 2026

Self employment tax calculator

Your profit in. Your quarterly number out.

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Penalty calculator

See what late filing and late paying add.

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Why it matters

When cash is short, a payroll deposit can wait a week. Then the penalties start.

Withheld payroll tax is not the business's money. The IRS can charge it to the owner or any responsible person.

If you owe, act early. A tax pro can talk to the IRS about plans and penalties for your business.

  • Taxes you withhold from workers are trust fund taxes. You hold their money until you deposit it.
  • The Trust Fund Recovery Penalty can be charged to any responsible person who willfully does not pay them. No bad intent is needed.
  • A responsible person can be an owner, officer, partner or anyone with power over which bills get paid.
  • Late payroll deposits cost 2% (1 to 5 days late), 5% (6 to 15 days) or 10% (over 15 days). It rises to 15% after an IRS demand.
  • Employers file Form 941 every quarter for withheld income tax, Social Security and Medicare.
  • S corporation owners who work in the business must take reasonable wages before distributions.

What a tax pro may ask you

Have these ready. Clear answers help a tax firm see what fits you.

  • Your business type: sole owner, LLC, S corp or C corp
  • Which Form 941 quarters are late or unpaid
  • Which tax years you have not filed
  • The notice code in the top right corner of any IRS letter

Common questions

What is the Trust Fund Recovery Penalty?

A penalty equal to unpaid withheld payroll tax, charged to a responsible person who willfully did not pay it.

How much is the late deposit penalty?

2% if 1 to 5 days late, 5% if 6 to 15 days, 10% after that, and 15% after an IRS demand.

Can a tax pro stop IRS collection?

They can ask the IRS for a payment plan, a hold, penalty relief or an offer, based on your facts. Results depend on your situation. Not every case qualifies.

Ways to get help

Offer in compromise: Ask the IRS to take less than you owe. Hard to get.Payment plan: Pay what you owe a little each month.Not collectible: The IRS pauses collection while money is too tight.What happens if I owe the IRS and can't pay?What happens if I owe back taxes?I owe the IRS money. What do I do first?

Results depend on your situation. Not every case qualifies.

Sources

  1. IRS: Employment taxes and the Trust Fund Recovery Penalty
  2. IRS: Failure to deposit penalty
  3. IRS: About Form 941
  4. IRS: S corporation compensation
  5. SBA Office of Advocacy: Frequently Asked Questions About Small Business, 2026
Other jobs

We help a lot of jobs

Self employed graphic designer at a home studio desk with a sketch tabletSelf employedNo withholding means the tax bill comes all at once.Gig worker in a hoodie with a delivery bag on a bike at a city cornerGig workersApp pay is taxable, 1099 or not.Rideshare driver in his 40s leaning on his clean sedan at a curb, phone in handRideshare driversMiles matter when the 1099 comes.Delivery driver carrying a box up porch steps, brown jacket, smilingDelivery driversDelivery pay, no withholding.Owner operator truck driver standing by the cab of his semi at a truck stop at dawnOwner operatorsYour own truck, your own Form 2290.

Run the numbers with our free tax tools, like the penalty and payment plan math.

See your options

A few questions. A tax pro calls you back.

Free tools: penalty calculator, 10 year clock, IRS offer data

Free to use. Not the IRS or any government agency. Results depend on your situation. Not every case qualifies.