A report by Small Business Administration, a US government agency offering support to entrepreneurs and small businesses, shows that one-third of small businesses in the US close shop within two years of opening. One of the biggest reasons behind this, among others such as product or location, is huge tax debts. The IRS, however, rarely closes a business with outstanding tax debts, unless it has huge unpaid payroll taxes. If you run a small business and owe the IRS, there are ways to deal with the issue to prevent levies on assets and having to close shop. Speak to an experienced tax attorney at the Law Offices of Nick Nemeth to learn more.
In the meantime, here is what you need to know when dealing with IRS tax issues.
Contact the IRS Regularly
The first thing to remember when you owe taxes to the IRS is to regularly keep in touch with the central tax authority. Even if you can’t pay the entire amount, tell the IRS about your intentions and ask for time. Ignoring your tax bills will not help, as sooner or later, the IRS will get around to collecting the outstanding taxes. You may be charged penalties and interest. The bad news is, the IRS, does not require a court order to seize bank accounts or close your business.
Share Financial Information
If a tax collector approaches you looking for certain financial information, make sure to cooperate. This, however, does not mean that you have to disclose every fact. The idea is to make the IRS realize that you understand your tax responsibilities and not trying to evade paying outstanding taxes. Never lie to the IRS, and if you need professional help, seek a local reputable tax attorney.
Pay Heed to Warnings
Although the IRS rarely shuts down a business, you do not want to be avoiding any of its warnings. The central tax authority usually sends a number of collection letters before it levies a property or decides to shut down a business. Even after sending the Final Notice of Intent to Levy, it gives you a period of 30 days before taking any action. The last thing you want to be doing is ignoring these notices and warnings. So, the moment you receive the first collection letter from the IRS, speak to a local tax law attorney and take the right steps.
Options to Settle Tax Debts
Here are some of the options the IRS provides to small business owners to settle outstanding tax debts.
Negotiate a Payment Plan
Small businesses, like individual taxpayers, can negotiate with the IRS to settle their taxes in installments. If the IRS agrees to sign a payment plan with you, this may also stop their collection activities such as levies on property items.
Appeal for a Non-Collectible Status
Non-collectible status is an option that allows qualified applicants to pay their outstanding tax debts at a later time in the future. The option is for small businesses who are facing a financial hardship. Your tax obligations are still there when the IRS places your tax account under non-collectible status, and it may even charge penalties and interests for outstanding dues.
Offer in Compromise Agreement
An Offer in Compromise is another option for distressed small business owners to help settle their tax liabilities. A part of the IRS’s fresh start initiative, the program allows taxpayers to pay less than the amount of taxes they owe to the central tax authority.
Hire a Local Tax Law Attorney
If you think none of the options would be helpful, you may consider filing for bankruptcy as the last resort to wipe out or get rid of your tax debts. Tax attorneys at The Law Offices of Nick Nemeth can give you an insight into bankruptcy and the above mentioned IRS tax relief options. After evaluating your business’ financial condition, we suggest the one that is ideal for you. To schedule an appointment with one of our tax attorneys, call (972) 426-2553, or fill out our contact form, we will get back to you, shortly.
