I am eligible to file for US Citizenship. I currently have a "Civil Penanlty" from IRS from my previous emploer that did not pay taxes and it will expire 4/2012. There is a question on the application that asks if "i have any taxes overdue?" How should I answer this? Will it flag IRS? Please advice.

Your employer failed to remit payroll taxes? Did they withhold from your pay? What was your visa status and what type of employment papers did you fill out?

I was an officer from my previous emplyment and the company failed to pay payroll taxes. Taxes where withheld from my paycheck. I paid and filed taxes every year so it's a company debt. Its on "unocllectable status" until 4/2012.

Ask your CPA if you can answer that question, "no." if so, then file the form. If not, wait until you can. Most officers will not approve a natz if you owe taxes under the "good moral character" requirement.