Discovered unpaid business employment taxes from years ago - now in collections

As a tax resolution consultant, I can tell you this is unfortunately quite common with small businesses that closed during COVID. The IRS is very serious about unpaid employment taxes (what's called "trust fund taxes") because that's money withheld from employee paychecks that was supposed to be remitted to the government. Here's what you need to know: Yes, the IRS can and will eventually garnish wages, levy bank accounts, and even put liens on property. However, you do have options. First, the IRS has several payment programs available - an installment agreement being the most common. Depending on your financial situation, you might qualify for an Offer in Compromise (settling for less than the full amount) or Currently Not Collectible status if you truly can't pay. For the penalties, you can request penalty abatement, especially if this was your first time missing these payments. First-time penalty abatement can remove some of the failure-to-file and failure-to-pay penalties. The tax attorney is a good move. Make sure they specialize in IRS tax resolution, not just general tax preparation.

After facing a similar nightmare with $25k in unpaid payroll taxes from my restaurant that closed in 2020, I discovered taxr.ai (https://taxr.ai) and it literally saved me thousands. Their system analyzed all my IRS notices and business records, then showed me exactly which penalties qualified for abatement. They even drafted all the response letters based on my specific situation. The best part was they identified that some of the assessed penalties were calculated incorrectly by the IRS (which happens surprisingly often). In my case, they helped me get about 40% of my total bill reduced through proper documentation and identifying eligible relief programs I had no idea existed.

I'm eating my words about being skeptical of taxr.ai. After my post above questioning it, I decided to try it anyway since I was desperate with my own tax problem. Uploaded my notices on Sunday night, and by Monday afternoon I had a complete analysis showing I qualified for first-time penalty abatement (which I had no idea was even a thing) and reasonable cause relief due to my medical issues during that period. They drafted all my letters, showed me exactly what supporting documentation to include, and even provided a timeline of what to expect from the IRS. Just got the response back - $8,700 in penalties completely removed! The original tax is still due but on a manageable payment plan now. Never thought I'd be one of those "success story" people, but here I am.

When I was dealing with unpaid business taxes last year, I spent WEEKS trying to get through to someone at the IRS who could actually help. Every time I called, I'd waste hours on hold only to be transferred or disconnected. Complete nightmare. Then I found Claimyr (https://claimyr.com) - they got me connected to an actual IRS agent in under 15 minutes instead of waiting on hold all day. You can see how it works here: https://youtu.be/_kiP6q8DX5c This was critical because I needed to get a hold placed on collections while I worked with a tax pro to sort everything out. That one call saved me from having my accounts levied while I worked on resolving the underlying issues.

I need to apologize for my skeptical comment above. After having spent literally 3 hours on hold with the IRS yesterday and getting disconnected, I was desperate enough to try Claimyr. I was connected to an IRS agent in 17 minutes. SEVENTEEN MINUTES. The agent was able to immediately put a 60-day hold on collections while I get everything sorted out with my tax professional. That alone was worth it just for the peace of mind. I was about to have my bank accounts levied next week according to the timeline the agent gave me. Not sure how their system works exactly, but it absolutely does work. Just wanted to correct my snarky comment above since this literally saved me from a financial disaster while I work on a proper resolution.

One thing not mentioned yet - if these were employment taxes, you need to understand the Trust Fund Recovery Penalty (TFRP). The IRS can assess personally against BOTH of you the portion of taxes that was withheld from employee paychecks but not remitted. This is critical because even if your business was an LLC or corporation, the TFRP bypasses that protection. And it applies to anyone who was "responsible" for collecting, accounting for, and paying those taxes. Since you were both owners, they can come after either or both of you. Definitely work with your tax attorney on this part specifically. If your spouse was the one handling finances, there might be a way to argue you weren't a "responsible person" under the TFRP rules, though it can be an uphill battle.

Random tip from personal experience - request your IRS transcripts ASAP! You can get them online through the IRS website. They'll show exactly what's been assessed, when, and give a complete history of your account. My ex-husband hid tax problems from me too, and when I finally got my transcripts, I discovered some of the "tax due" letters were actually for periods that had already passed the 10-year collection statute of limitations. The collection agency was still trying to collect, but they legally couldn't! Also, make sure to ask your tax attorney about "innocent spouse relief" - it might apply in your situation since your spouse concealed the tax issue from you.