IRS Tax Relief for Medical and Dental Practices So You Can Keep Seeing Patients.
Updated
Payroll runs every two weeks. Insurance and Medicare money shows up when it shows up. When that gap gets wide, it's tempting to let a payroll tax deposit wait, and on the personal side, a big income with too little withheld leaves a bill every April. We take over the IRS side so you can keep the practice running.
Other creditors first
Paying rent, staff, or suppliers while payroll taxes go unpaid is something the IRS reads as a sign of willfulness.
How it happens
Why Practices End Up Owing the IRS
A practice can be booked solid and still be short on cash. Staff get paid on schedule, rent and supplies are due, and the money for work you already did sits with insurers and Medicare while claims get processed, denied, and resubmitted.
In that squeeze, a payroll tax deposit can look like the one bill that can wait. It isn't. The income tax and Social Security withheld from your staff's checks are trust fund taxes, and the IRS says that paying other creditors while those go unpaid is a sign of willfulness for a penalty that lands on you personally.
The personal side catches up too. A hospital W-2, partnership income, and locum or contract shifts on a 1099 can add up to far more than what was withheld. And if your adjusted gross income was over $150,000, the safe harbor for avoiding an underpayment penalty rises to 110% of last year's tax.
IRS problems
The IRS Problems Practice Owners Bring Us
Some of these sit with the practice, some with you personally, and a few land in both places at once. Each one has a way through with the IRS.
Unpaid 941 Payroll Taxes
Missed deposits add up fast, with failure-to-deposit penalties from 2% to 15% before interest. We pull the payroll transcripts, get any missing 941s filed, and work the balance into a program while current deposits stay on track.
See how we helpThe Trust Fund Recovery Penalty
The unpaid withholding can be assessed against you personally as a responsible person, separate from the practice. You have 60 days from the IRS letter to appeal the proposed penalty. We prepare you for the interview and handle the response.
See how we helpLevies on Medicare Payments
Through the Federal Payment Levy Program, the IRS can take up to 100% of a Medicare provider payment, and it keeps going until the debt is paid or another arrangement is in place. We work to get that arrangement in place.
See how we helpLevies on Insurer Payments and the Practice Account
The IRS uses Form 668-A on bank accounts and business receivables, and money an insurer owes the practice is a receivable. A bank holds levied funds 21 days before sending them. We use that window to request a release tied to a program.
See how we helpHigh Income, Too Little Withheld
Partnership income and 1099 locum work have nothing withheld, and your W-2 withholding doesn't know about them. Each employer also withholds the 0.9% Additional Medicare Tax only on what it pays you over $200,000. We put the balance into a payment plan.
See how we helpAudits of the Practice or Your Return
An audit can reach the practice return, payroll, or your personal return. How you classify contract clinicians matters, since employee or contractor status turns on control under the IRS common-law rules. We deal with the examiner and the documents.
See how we help
Your Medicare payments
Can the IRS Levy Medicare Payments?
Yes, and it can take more than most providers expect. Through the Federal Payment Levy Program, the IRS matches people who owe against federal payments they're due, and Medicare provider and supplier payments are on that list.
For most federal payments the levy is 15%. For Medicare providers, Section 6331(h)(3) of the Internal Revenue Code substitutes 100%, and the IRS has applied the full 100% since October 23, 2015. The levy repeats with every payment until the debt is paid or another arrangement is made.
Before it starts, the IRS sends a final notice (CP90 or CP297) and waits 30 days. Payments also stay out of the program once you've made other arrangements to pay or the IRS has found a hardship. Those 30 days are the time to call us.
100%
of a Medicare provider payment can be levied, compared with 15% for most federal payments.
30 days
after the final notice (CP90 or CP297) before the IRS sends the levy to the Treasury.
Continuous
The levy repeats with each payment until the balance is paid or another arrangement, like an installment agreement, is made.
Sources: IRS Federal Payment Levy Program · IRC § 6331
Payroll taxes
How a Practice Payroll Balance Becomes Personal
Payroll tax deposits run on a monthly or semiweekly schedule under the IRS employment tax due dates. Miss one and the failure-to-deposit penalty starts at 2%, climbs to 10% after 15 days, and reaches 15% once a notice goes more than 10 days unpaid.
If the practice can't pay, the IRS looks at the people behind it. The Trust Fund Recovery Penalty equals the unpaid income tax withheld plus the employees' share of Social Security and Medicare. It can be assessed against any responsible person who willfully didn't pay, which can mean an owner, an officer, or anyone with authority to decide which bills get paid.
Willfulness doesn't require bad intent, and the practice doesn't have to close first. That's why the interview matters, and why you shouldn't go into it alone. We prepare you, handle the IRS side, and answer a proposed assessment within the 60-day appeal window.
At the same time, we work the practice's balance into a payment plan or another program and help keep current deposits on schedule, so no new quarters get added to the pile.
How a payroll balance moves
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A Deposit Slips
Reimbursements run late and a 941 deposit waits.
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Penalties and Notices
Failure-to-deposit penalties of 2% to 15%, then collection notices.
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The Responsible Person Interview
The IRS asks who decided which bills got paid.
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The Proposed Penalty Letter
You have 60 days to appeal the personal assessment.
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We Step In
Power of Attorney, transcripts, an appeal if it fits, and a program for the practice.
Discreet help
You Don't Have to Explain How It Happened
Your front desk sees the mail, and your patients trust you with their health. A lot of the physicians and dentists we talk to worry about either one finding out the practice owes the IRS. It happens to good practices, often because the money came in late, and it's nothing we judge.
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 Practice's IRS Case
You don't have to step out of clinic for any of this. We work by phone, secure document portal, and video, and we schedule around your patient hours.
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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 Medical and Dental Practices
Installment Agreement
Spreads the practice or personal balance into monthly payments. Once it's in place, new levies generally stop, and an arrangement to pay can keep Medicare payments out of the levy program.
Levy Release
When a levy hits Medicare payments, insurer payments, or the practice account, we request a release tied to a program so the practice can keep operating. The IRS decides.
Penalty Abatement
Reasonable cause or first-time abatement can remove failure-to-deposit and other penalties, which can shrink a payroll balance in a real way.
Offer in Compromise
Settles for less than the full balance when income, expenses, and equity show the IRS can't collect it all. With physician income it's a harder fit, so we run the IRS formula honestly before you apply.
Where we help
Where We Help Medical and Dental Practices
These local pages cover the IRS offices, free help, and the issues we see in each area. Wherever your practice is, we work with you by phone, secure portal, and video.
Frequently asked
Questions Physicians and Dentists Ask About the IRS
Can the IRS Take Our Medicare Payments?
Can the IRS Levy Payments From Private Insurers?
Am I Personally Liable for the Practice's Payroll Taxes?
I Earn a Good Salary. Why Do I Owe So Much in April?
I Work Locum Shifts on a 1099. What Do I Owe?
Will My Staff or Patients Find Out?
How Much Does IRS Tax Relief Cost?
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