IRS Tax Relief for Construction Contractors Handled While the Work Keeps Moving.
Updated
Construction pays in lumps: a draw here, a final invoice there, almost always on a 1099 with no tax taken out. Fall behind on estimates, or on payroll taxes for your crew, and the IRS can levy the money general contractors owe you. We take over the IRS side so the work keeps going.
15.3%
Self-employment tax on your net earnings, before income tax. Nobody withholds it from a draw or a final payment.
How it happens
Why Contractors Fall Behind With the IRS
Nobody withholds tax from a draw. On top of income tax, you owe self-employment tax of 15.3% on your net earnings, the Social Security and Medicare an employer would normally split with you (IRS, self-employment tax). If you expect to owe $1,000 or more, you generally have to send quarterly estimated payments (IRS, estimated taxes).
Construction cash flow makes those payments easy to skip. Materials get bought up front, the GC pays when the GC pays, retainage sits until the job closes out, and a wet month slows everything down. Then April comes, the bill covers the whole year, and next year's estimates are already behind.
Once you have a crew, payroll adds a second IRS account. Withheld taxes have to be deposited on schedule. And if you pay helpers as 1099 subs when they work like employees, the IRS can hold you liable for the employment taxes it says should have been paid (IRS, worker classification).
IRS problems
The IRS Problems Contractors Bring Us
Some are a single bad year. Others are three years of unfiled returns and a payroll account nobody has looked at since the last big job.
Back Taxes on 1099 Income
One big year with no estimates sent in leaves a balance bigger than any single check. Sole proprietors apply for IRS payment plans as individuals, and we build one around what the business really clears each month.
See how we helpYears of Unfiled Returns
The 1099s your GCs sent are already at the IRS. If your returns are missing, the IRS can file substitute returns that might not credit your materials, tools, or mileage. We file the real ones so the balance starts from real numbers.
See how we helpLevies on Money GCs Owe You
The IRS uses Form 668-A to levy business receivables, so a general contractor holding your draw has to send it to the IRS instead. We file Power of Attorney and request a release tied to a payment plan or other program.
See how we helpPayroll Taxes for Your Crew
Missed 941 deposits pile up penalties fast, and the withheld part can be assessed against you personally through the trust fund recovery penalty. We pull the payroll transcripts and work the open quarters into a resolution.
See how we helpSubs Paid Without a W-9
If a sub never gave you a correct taxpayer ID, you were supposed to backup withhold 24% of what you paid them. If you didn't, you may be liable for the amount that wasn't withheld. We sort out what's owed and resolve it with the rest.
See how we helpWorker Classification Audits
If the IRS decides your 1099 helpers were really employees, it can assess employment taxes for them. We represent you through the exam and argue for the relief the law allows, like Section 530 when you had a reasonable basis.
See how we help
Your equipment
Can the IRS Take Your Tools, Truck, or Equipment?
It can, but federal law puts real limits on it. Equipment and vehicles you use in your business are protected from levy unless a senior IRS official personally approves the seizure in writing, or the IRS finds collection is in jeopardy. And that official can't approve it without first finding your other assets won't cover the debt (IRC § 6334(e)).
There are two catches. That protection is written for individual taxpayers, so equipment a corporation owns stands on different footing. And the separate tools-of-the-trade exemption is small: $5,990 for 2026 (Rev. Proc. 2025-32). That's why the more common threat is a levy on your receivables or bank account, not a seizure on the jobsite.
In writing
A senior IRS official has to personally approve, in writing, a levy on business equipment you use as an individual taxpayer.
$5,990
The 2026 limit on the separate tools-of-the-trade exemption, counting all your tools together. It won't cover a work truck.
Other assets first
The official can't approve that levy without finding your other assets aren't enough to pay what you owe.
Sources: IRC § 6334 · Rev. Proc. 2025-32 · IRS, levies
Your receivables
Levies on GC Payments and the Federal Payment Levy Program
The IRS can levy the money owed to you. It sends Form 668-A to the general contractor or customer holding your payment, and they have to turn that money over instead of paying you (IRS, third-party levies). A levy on your bank account holds the funds for 21 days, then sends them (IRS, levies).
Federal work adds another route. Through the Federal Payment Levy Program, the IRS matches tax debts against payments the Treasury sends out, including payments to federal contractors and vendors. Some contractor payments can be levied at 100%, up to what you owe, and the levy continues until the debt is paid or other arrangements are made.
Federal contractors also lose the usual warning. The IRS can levy first and send the hearing notice afterward (IRC § 6330(f)). The program leaves out accounts with an arrangement to pay, so getting a plan in place before the next payment is due is the first thing we work toward.
How a contractor levy moves
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The Final Notice Goes Out
The IRS warns it intends to levy. Federal contractors can be levied first and notified after.
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Your Payment Is Held
The GC, the bank, or the Treasury sends money owed to you to the IRS.
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We File Power of Attorney
The IRS starts dealing with us, and we pull your transcripts.
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We Ask for a Release
Along with the returns and the plan the IRS needs to see. The decision is the IRS's.
Discreet help
You Don't Have to Explain How It Happened
A lot of the contractors we talk to are carrying this by themselves. The crew doesn't know, the GC doesn't know, and sometimes the family doesn't either, because you're the one everybody counts on to have it handled. Owing the IRS happens to good builders all the time, and we won't judge how you got here.
Your consultation is free and confidential. Once you hire us and Power of Attorney is on file, the IRS deals with us, so the calls and the back-and-forth stop landing on you.
How We Keep It Discreet
- A free, confidential first conversation
- No judgment about how it happened
- Once Power of Attorney is filed, the IRS contacts us
- Phone, secure document portal, and video, with no office visit
How it works
How We Work a Contractor's IRS Case
You don't have to leave a jobsite for any of this. We work by phone, secure document portal, and video, around your schedule, and once Power of Attorney is filed the IRS contacts us, not you.
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Free Consultation
A representative calls you back, listens to what is going on, and tells you whether we can help.
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Power of Attorney
We file Form 2848 so the IRS contacts us instead of you.
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Transcripts and Returns
We pull your IRS transcripts and get any missing returns filed.
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Request to the IRS
We submit the program request on your behalf. The IRS reviews and decides.
Timelines and outcomes are determined by the IRS based on the facts of each case. Results vary and are not guaranteed.
IRS programs
IRS Programs That Fit Contractors
Installment Agreement
Spreads the balance into monthly payments. The IRS generally doesn't levy while a plan is being considered or in effect, and an arrangement to pay keeps an account out of the federal payment levy program.
Offer in Compromise
Settles for less than the full balance when your income, expenses, and equity, equipment included, show you can't pay it all. We run the IRS math before you spend money applying.
Currently Not Collectible
If a slow season leaves nothing after basic living expenses, the IRS can pause collection. Penalties and interest keep running while it's paused.
Penalty Abatement
Late-filing, late-payment, and late-deposit penalties can come off for reasonable cause or first-time abatement, which cuts the balance you're paying down.
Where we help
Where We Help Construction Contractors
Your case is with the IRS, a federal agency, so we can work it wherever you build. These city pages cover what we see in some of the construction markets where we help.
Frequently asked
Contractors and the IRS: Common Questions
Can the IRS Take My Work Truck or Equipment?
Can the IRS Levy the Money a General Contractor Owes Me?
Why Is the Treasury Holding Back My Federal Contract Payment?
What If the IRS Says My 1099 Subs Were Really Employees?
A Sub Never Gave Me a W-9. Am I on the Hook?
I Haven't Filed in a Few Years. Where Do I Start?
How Much Does It Cost to Resolve a Contractor's IRS Debt?
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