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Houston Business & Payroll Tax Relief

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Texas boasts one of the largest economies in the United States. Whether it’s from oil, gas, steel, tourism, banking, or farming, the geography, sheer size, and population of Texas contributes a huge amount of money to the gross domestic production rates. Perhaps because the economy is so large, Texas also boasts very low business taxes, and even has a zero percent tax for some small businesses whose revenues are under a certain threshold which is recalculated regularly.

Even still, when you are struggling with the state or IRS claiming that you owe back taxes in Texas, it can be stressful and even devastating to your business. The government can place liens and levies on your property, including your business itself, rendering you unable to do business and even permanently shutting you down.

Fear not; you do have options available. Texas, however, can be a very difficult state with which to deal when you are facing back tax debt, and it can require knowledgeable, experienced help to get out from under the burden that threatens your livelihood.

That’s why Instant Tax Solutions is here. We are ready to help you understand the circumstances, make a plan, and fight to get you back on your feet. We will review your finances top to bottom and give you all the options available to make a plan. Then we can deal with the government on your behalf.

If your business is facing back tax burdens and you don’t know what to do, we are here to provide the help you need. Call us today at (888) 921-3781 or reach out online to schedule your confidential case review.

Understanding Houston Payroll Taxes

One thing to know is that Texas does not have a state income tax. This means that businesses do not collect or withhold payroll taxes for state taxes in the state. Just because the state does not have payroll taxes, however, this does not completely free you as a business from the need to pay taxes. You will need to understand franchise tax and unemployment taxes. In addition, you will still need to report employee wages for the purpose of paying unemployment taxes.

In addition, you are still subject to federal payroll taxes, so you will need to withhold these. It is federal taxes where many Texas businesses find themselves with back tax burdens and need help from a professional tax services company like Instant Tax Solutions. We can help you understand your tax burden and sometimes reduce it to make paying the government more manageable. We can also work with you, diving deep into your accounts in order to find any forms of relief for which you may be eligible.

An Overview of Houston Business Taxes

The state of Texas does not levy an income tax for individuals, nor does it directly tax revenues for businesses and corporations. Texas does, however, levy a franchise tax on businesses, one of four states to take this approach.

A franchise tax is essentially a tax for the privilege of doing business and is levied on a business’ gross receipts rather than on corporate income. This tax is low: under 4%, and it can be filed using a simple one-page form. Retailers and wholesalers see a slightly higher percentage, while other businesses may pay a maximum of 0.75%. Finally, small businesses with annual receipts that fail to meet a certain threshold (recalculated regularly) pay no franchise at all. This threshold is usually high — in 2020, it was $1,180,000.

Understanding Houston Unemployment Taxes

In Texas, you are required to pay state unemployment taxes, which will benefit employees who are laid off or lose their jobs through no fault of their own. Most employers in the state are required to pay this tax, which is levied on the first $9,000 per employee each year. You are generally required (with a few exceptions) to report all wages. Situations where wage reporting is not required include:

  • Sole proprietors
  • Partner wages

It is worth noting, however, that wages paid by an LLC or corporation to members or officers are reportable in Texas, regardless of IRS classification and treatment. Reimbursing employers also must report wages but are not responsible for paying taxes. Rather, they reimburse the state for benefits paid to former employees.

Wages must be reported each quarter, and should include a Social Security number, name, and gross wages for each employee. This reporting is done electronically.

Cafeteria Plans and 401(k) Plans

Cafeteria plans, which offer cash and statutory benefits packages, are not reportable. Such benefits include:

  • Retirement benefits
  • Sickness and accidental death and disability benefits
  • Medical or hospital benefits attached to the above
  • Death benefits or life insurance

Other benefits purchased with employer funds — such as profit sharing, deferred compensation, daycare, and the like — may be taxable, reportable wages.

401(k) plans that include employer contributions are not taxable if the trust meets certain requirements or is exempt under the state tax code. Employee contributions that result from salary reduction or payroll deduction, however, are taxable.

Types of Federal and Houston Business Tax Relief

Texas state incentive and financial programs that can provide relief from taxes and financial benefits to businesses are designed to encourage companies that innovate, create jobs, and drive production within the state.

While many of these programs are grants and incentives as opposed to strict tax relief, they can provide much-needed income, usually tax-free, that you can use to pay other expenses while freeing up money to address your tax burdens. There are many such programs available, but some of the most common include the following:

Texas Enterprise Fund (TEF)

The TEF is the largest of its kind in the United States and comprises a financial incentive for those projects that offer significant capital investment and which create significant jobs. It applies when a single site in Texas competes with an out-of-state offering.

Event Trust Funds

This fund offers incentives for tourism and hospitality. It particularly applies to hotel, alcoholic beverage, and auto rental taxes related to specific venues that undergo a rigorous selection process.

Governor’s University Research Initiative (GURI)

This program offers incentives to those companies that bring the best and brightest of distinguished research minds in the world to the state. It is available to institutes of higher education and is a grant-matching program.

Texas Enterprise Zone Program

The Texas Enterprise Zone Program is designed to promote job creation in the state. It also rewards significant private investments in economically distressed regions.

Texas Travel Industry Recovery Grant

One of the newest incentives for businesses in Texas was established under the American Rescue Plan Act. The Texas Travel Industry Recovery Grant is designed to support Texas businesses in the hospitality, travel, and tourism industries who have suffered during the pandemic in the form of one-time grants to reimburse eligible costs.

Texas Small Business Credit Initiative (TSBCI)

TSBCI is designed to aid in small business growth and improve access to funding for small businesses. It is focused on marginalized businesses as well as those affected by COVID-19. This is a new program that the state hopes will significantly aid startups and small companies. It is expected to be at least partially funded by the U.S. Department of the Treasury.

Industrial Revenue Bonds (IRBs)

Industrial Revenue Bonds offer a means of financing projects promoting new businesses, grow existing businesses, encourage job growth, or expand a community tax base. Depending on the type of bonds for which you apply, they may be taxable or tax exempt.

Spaceport Trust fund

Texas has one of the most important spaceport business communities in the nation, and this fund offers help to develop infrastructure for establishing new spaceports. As companies begin to explore the concept of space tourism, this fund may become quite important in the hear future.

Opportunity Zones

Opportunity Zones are a national program built to support job creation and economic growth in distressed areas all over the country. It offers capital gains tax abatement and other incentives for those who invest in these zones and is funded by the U.S. Treasury Department.

Types of Federal Tax Relief

As stated, federal tax burdens are more common than state tax problems in Texas. If you are facing back tax issues from the IRS as opposed to the state, several types of relief may be available that can reduce or even eliminate this burden.

Instant Tax Solutions can review your finances and see if you qualify for any of the following:

  • Currently Not Collectible: This means that your current finances show that you simply cannot pay the taxes due. If you can demonstrate this to be the case, the IRS may defer your tax burden for a time until you are more financially stable.
  • Installment Plans: In many cases, it is possible to negotiate with the agency to set up a payment plan of scheduled, reasonable amounts that enable you to gradually pay down your taxes.
  • Offer in Compromise: This means we negotiate a lower amount for your taxes which the IRS accepts as payment in full.
  • Amended Tax Returns: Filing an amended tax return can sometimes lower your tax burden significantly.
  • Fee and Penalty Abatement: Sometimes the IRS is willing to remove penalty fees and their associated interest, which can reduce the amount you owe
  • Appealing a Decision: If the IRS makes a mistake, you can appeal their decision and sometimes get good results.

Let Us Help With Houston Business Tax Compliance

Instant Tax Solutions has over a decade of experience helping individuals and businesses find relief from the crushing stress of tax burden. We are a partner and dedicated ally in helping you get on the path to financial recovery.

Owing back business taxes can be devastating, especially for business operations, and we want to help you plan for a way out. Your initial consultation is absolutely free with no obligation. Let us negotiate with the state and federal government on your behalf and help you plan for the future. Call us at (888) 921-3781 or contact us online for your case review today.

Your Responsibilities as a Business Owner

Business OwnerTaking care of payroll taxes is the responsibility of every employer. Businesses are legally bound to withhold state and federal income tax, Social Security, and Medicare taxes from the paycheck of each individual employee. Businesses are required by law to match Social Security and Medicare taxes as well as pay state and federal unemployment tax for each employee.

If you as a business owner do not understand the complexities of business taxes, you are not alone. Many business owners are in the exact same boat, and we have helped them to become compliant again, and allowed them to focus on running their company instead of dealing with the government.

We can do this for you too.

Responsibilities of a Business Owner

Your business must have each employee complete a W-4 form at the time of hire and have it on file. This form is used to determine the amount of the payroll tax withheld from an employee’s paycheck. In addition, many states use the W-4 to compute state tax withholding amount.

The federal tax information concerns employee Social Security and Medicare which is also known as the Federal Insurance Contributions Act (FICA). This provides funding for retirees, disabled individuals and the minor children of a decedent. The amount of social security that a person will receive upon retirement is directly proportion to the amount a person earns.

Responsibilities for Payroll Tax Withholding

By law FICA tax must be withheld from an employee’s paycheck. If an employer fails to do this, they will be subject to a Trust Fund Recovery Penalty from the IRS. This penalty is imposed on employers or individuals who have been determined to be responsible for the violation. The allotted penalty is one hundred percent of the federal or state payroll tax owed, in addition to multiple fines. The employer must pay a matching amount of FICA tax on each employee.

How to File Business Taxes

There are four different payroll tax forms that apply to federal payroll tax and employee withholding. An IRS tax attorney will know which ones to use for your business. You must file and pay these quarterly taxes to the U.S. Department of Treasury to ensure that, in the event one of your employees becomes disabled or unemployed, they are able to utilize their benefits.

Federal and State Unemployment Tax (FUTA)

By law each employer must also pay federal and state business taxes in order to provide a fund for unemployment compensation insurance for their workers. This is called Federal and State Unemployment Tax (FUTA). The income base for FUTA is $7000, with the employer being legally responsible for only the first $7000 being paid to an unemployed worker.

As long as you as a business owner continue to pay federal and state income tax, you have nothing to worry about. However, if for some reason you run into a problem that hinders your ability to pay, you must get professional business tax relief.

The In's and Out's of Business Taxes

How the Government Tracks Businesses

As a business owner, you may be familiar with payroll tax withholding and your responsibility to withhold and file federal, state and local taxes for your employees. However, prior to establishing a business or hiring an employee, you must secure an employer identification number (EIN). This will allow the government to track your business and ensure that you are filing your quarterly business taxes on time.

How These Apply to Small Business Subcontract Work

Small businesses that subcontract work are not required to file federal payroll taxes for people who work on an independent basis. That is why some smaller businesses find subcontracting a viable option. But, should the status of the employee ever change, this would require the employer to make payroll and taxation amendments to reflect this change. Your IRS tax attorney can make this transition smoother for you and alleviate any payroll tax problem. If you mistakenly file the wrong federal tax information on an employee, this will create a federal payroll tax problem. Your business will experience dire financial difficulties as a result. Again this is reason enough to enlist the assistance of a qualified tax attorney to circumvent any misunderstandings or problems.

Business Tax Compliance with IRS Withholding Regulations

There are several things employers must do to make sure they are in compliance with federal and state laws. They are required by law to withhold a certain percentage of an employee’s wages and to match that contribution. As of 2007, this rate was approximately 6.2 %, according to Social Security tax regulations. The Medicare tax rate was 1.45% of employee income. Again the employer is legally bound to pay a matching amount.


What Is a 940 Business Tax Form?

IRS 940 FormIf you are not familiar with an IRS 940 tax form, you need a qualified expert to explain it to you in detail. As a business owner, if you do not completely understand this form, it can cause you expense problems. The 940 tax form requires a business to make unemployment payments for its employees. Failing to file these forms with the IRS can lead to having you company shut down and possibly even having criminal charges filed against you.

Form 940: Unemployment Payment Reporting Form

A firm like ours can help you understand the process of filing an IRS 940 business tax form and can assist you with the filing of any possible late tax returns as well. An IRS 940 form must be filed for domestic household employees, farming or agricultural employees and all business employees. No one is exempt from the requirement of employers to pay unemployment payments for each employee. It is the law.

Because of the complexities of the IRS 940 business tax laws, many employers find it very confusing. The tax code and regulations can vary depending on your type of business. Payroll tax attorneys know and understand each of these laws and how they will apply to your business. It is very important for you as a business owner to be aware of your responsibilities and to keep accurate records on all of your employees. Without this information, you may find yourself having a complex and difficult employer payroll tax problem.

AKA: Annual Unemployment Tax Return

Even though the prospect of filing business taxes is never a pleasant experience, a payroll tax attorney can take the headache out of doing this. The IRS 940 tax form is also known as the annual unemployment tax return. Your business is responsible for reporting to the government all taxes paid for each employee. Failure to do this will result in a payroll tax problem, for which you will have to seek employer payroll tax help. This is where your business tax attorney will come into play and can prove to be useful.

According to the federal code, the taxation will apply to the first $7,000 paid on behalf of each employee. This tax provides payments to a worker who has become displaced or unemployed. It is a important obligation for businesses to file quarterly IRS 940 tax forms. This may be the only source of income for the person who has been laid off or fired from a job. The government cracks down on businesses that do not comply with the laws surrounding this tax.

What Is a 941 Business Tax Form?

IRS 940 FormAn IRS 941 tax form is used to report payroll information to the IRS. Employers are required by law to withhold a percentage of employee wages for taxation purposes. These amounts are for Federal, Social Security and Medicare taxes. These taxes withheld from employees payroll checks are applied to pay tax liabilities at the end of the year.

Help With Your Form 941

The 941 Forms are used to report things such as:

  • Payroll Taxes on a Quarterly Basis
  • Social Security Adjustments
  • Sick Pay
  • Tips
  • Group Life Insurance
  • Previous Quarters Adjustment to any Payroll Taxes

If this information is foreign to you, a qualified business tax professional may be able to make more sense of it. Feel free to give us a call if you have any questions.

How to Use a Form 941

It is a business tax form used by an employer on a quarterly basis. The employer would NOT use the form to report back withholding, back income tax with-holdings, or any item non-payroll related such as pension, 401K, or gambling income. This tax form is used specifically for payroll reporting.

Quarterly Reporting Requirements

Employers are required to report and pay for 941 tax, four times per year. Failure by an employer to submit and pay the quarterly business taxes will result in IRS fines and penalties which accrue quite rapidly. Even a small business with one or two employees is subject to the same process. If you have questions, need payroll tax assistance or have a payroll tax problem, help is available. Hiring an IRS tax attorney will take the headache out of filing this information. A qualified business tax attorney can help you avoid late filing which can result in irreversible financial damages. The IRS has complex tax laws and codes regarding form 941. Trying to understand them is difficult. Serious problems with 941 taxes are no laughing matter.

What to do If you have failed to file

If your business is experiencing financial difficulties, you may find yourself falling behind on your federal obligations. Occasional even a very successful business man may simply neglect to file their quarterly reports. Fortunately there are companies like us available to facilitate your payroll tax relief. If your business has not filed the required tax forms and you owe outstanding 941 taxes, you will encounter a serious payroll tax problem.

How to Qualify for a Reduced Amount

If you cannot pay your IRS 941 taxes, you may even qualify for a reduction of the amount you owe. We deal with cases like this all the time, and can negotiate with the government for you, perhaps reducing your tax debt significantly. If a reduced settlement can be reached, you may even be able to pay off your outstanding business taxes in one lump sum. If not, there is the alternative of an installment agreement (also known as a payment plan), allowing you to make affordable monthly payments to eliminate your tax debt.

Avoiding Unnecessary Criminal Prosecution

The government has recently begun to be more aggressive in pursuit and prosecution business owners who fail to file their 941 taxes on time. They are extremely serious about businesses complying with the tax laws. They will be more receptive to someone who has a specialist working with them to resolve their business tax problems.

Related Tax Problems

Un-Edited Client Reviews

Linda C.
"The entire staff was very helpful and courteous through the process with no gimmicks."

The experience was a painless one with no hassles of hoops to jump. I had a debt of $16,000.00 and ended up paying $1,700.00. They handled everything from start to end with a very positive resolution. The entire staff was very helpful and courteous through the process with no gimmicks. Keep on with the GREAT work.

Kurtis and Jennifer S.
"They truly are the best in the business at getting people out of Tax troubles"

I just want to say what outstanding service I received from Instant Tax Solutions. They helped us through a very hard time in our lives when we needed it most. We can’t thank them enough for all their hard work and dedication. They truly are the best in the business at getting people out of Tax troubles, and we would refer them to anyone that are having hard times and in need of help from the IRS.

Aaron F.
"...made me feel comfortable working with them. A burden has been lifted from my shoulders."

I had ten years of taxes I hadn’t filed. I was really nervous and didn’t know what to do. I checked the IRS website for tips on selecting a company. Instant Tax Solutions had a good rating and made me feel comfortable working with them. A burden has been lifted from my shoulders. Thank you Instant Tax Solutions!

Kathleen R.
"I called Instant Tax Solutions and within 3 days my levy was released"

I had a very serious tax problem, I was basically looking at the end of my life as I knew it. I called Instant Tax Solutions and within 3 days my levy was released and the monthly installment agreement was far better then I could have ever hoped for.

Joseph H.
"When all was said and done, they saved me over $100,000."

I owed the IRS $160,000 in back taxes. I had a wage garnishment and my case was assigned to a Revenue Officer. I did not know what to do. Instant Tax Solutions was able to get my garnishment before my next paycheck. When all was said and done, they saved me over $100,000.

Debbie and Dennis S.
"...but your confidence and expert advise eased that feeling"

I’ll admit I was a little reluctant because I didn’t know anything about Instant Tax Solutions, but your confidence and expert advise eased that feeling. Within 24 hours of retaining your services and giving you the requested information my wife’s wage garnishment had been STOPPED. What a relief!

Stephen N.
"ITS was quick to respond and resolve my issues."

Great operation. Professional, knowledgeable and accommodating. Couldn’t have imagined a better experience, considering the situation. ITS was quick to respond and resolve my issues.

Kelly & Howard T.
"I would highly recommend them to anyone that needs help!"

I called to discuss some serious tax issues and from my very first phone call, this team was terrific. They were courteous, professional and quick to deliver. Instant Tax Solutions far-exceeded any expectations that I had. They turned our situation around very quickly. I would highly recommend them to anyone that needs help with the IRS.

Armando & Sofia M.
"Within 48 hours of contacting ITS, the levy was released..."

I received an IRS notice of a levy on my wages. Boy, was I scared. Within 48 hours of contacting ITS, the levy was released and now ITS is helping me to get caught up on unfiled returns. Thank you ITS!

Marcia and John K
" guys were simply great! Can't thank you enough."

This was the free consultation! Instant Tax Solutions spent over half an hour with me during my consultation. I was so impressed that my husband and I decided to sign immediately. From filing my back tax returns to settling my debt to the IRS and state of California, you guys were simply great! Can’t thank you enough. You guys are doing my taxes next year for sure!