Entrepreneurship can be difficult. Some years are great; others are not so much. But every year, like clockwork, the IRS comes calling and asks you for what’s theirs.
Small businesses frequently encounter unforeseen financial difficulties. Unpaid taxes are one of the scariest of these problems. While the IRS may seem forbearing at first, it can be dangerous to sit back and ignore them. When the IRS gets going, they are renowned for their unwavering tactics and unrelenting pursuit. They are the world’s most vicious collection agency.
So, if you find your business in this situation, it’s paramount to be proactive. Here’s a comprehensive guide to help you correct the course.
Note: If the IRS is claiming you owe $10,000 or more, contact our accounting firm for a payroll tax relief professional immediately for a consultation and learn about your tax debt relief options with New Freedom Tax Relief.
1: Don’t Ignore The IRS
Being aware of the situation and acting upon it is the first step. Even while you may not agree with the IRS, you cannot ignore them or, worse, leave them unopened in your stack of unread mail. Acknowledge the seriousness of overdue taxes and that they are an obligation that will never go away. You can plan a remedy more effectively the sooner you face reality.
2: Open Lines of Communication
IRS notices can get worse if you ignore them. Rather, hire a reputable tax relief company to represent you properly and deal with the IRS on your behalf. Businesses similar to ours have had several interactions with the IRS. Prompt responses demonstrate your dedication to resolving the matter, and the appropriate firm will assist you at every stage of the procedure.
Payroll taxes due in 941 put you in double jeopardy. In addition to seizing your company’s assets and income, the IRS has the authority to breach the corporate veil and pursue personal charges against you in the absence of a court order.
3: Understand Penalties and Interest
Unpaid taxes don’t just stay static; they accumulate penalties and interest over time. With current IRS interest rates hovering at 8%, compounded daily, each day you procrastinate is costing you big time. Familiarize yourself with the accruing amounts to grasp the full scope of your liability. The more time you let pass, the higher the penalties and interest will be.
4: Consider Installment Agreements
The IRS often allows businesses to pay their tax liabilities over a period in monthly installments. If you can demonstrate a genuine inability to pay the lump sum, they might consider an installment agreement. This can help in managing cash flows and ensuring business operations aren’t severely disrupted.
5: Offer in Compromise (OIC)
In specific circumstances, the IRS might accept a reduced amount to settle the entire debt. Known as an Offer in Compromise, this option is contingent on demonstrating you cannot pay the full tax liability over the remaining 10-year collection statute. The right tax resolution firm will help you explore this option if you’re qualified for the program.
6: Temporarily Delay the Collection
If your business is in a dire financial situation, the IRS might temporarily delay its collection efforts. While this offers a short-term reprieve, it’s essential to use this time wisely and strategize a long-term solution.
7: Seek Professional Assistance
Engaging with a tax resolution firm can be invaluable. They can guide you through the intricacies of tax laws, help keep your business open, negotiate with the IRS on your behalf, and help formulate tax planning tailored to your unique circumstances.
8: Preventative Measures
While addressing current unpaid business taxes is vital, implementing systems to avoid future discrepancies is equally crucial. Regularly review your finances, maintain clear records, and stay updated with tax regulations. Make quarterly estimated payments and be proactive throughout that year by creating a concrete and comprehensive plan with your qualified tax resolution professional.
Conclusion
Unpaid taxes are a looming storm cloud for any small business owner. While the IRS might seem lenient initially, their eventual intervention can be formidable. By acknowledging the debt, communicating promptly, understanding your options, and seeking professional guidance, you can navigate these challenges effectively. Remember, in the realm of taxes, proactive action is always better than reactive measures.
New Freedom Tax Relief Is Here to Help You with Any IRS Problems You May Have
If you’re facing IRS problems and owe $10,000 or more in back taxes or are being audited, reach out to our tax resolution firm here at New Freedom Tax Relief, and we’ll schedule a free and confidential consultation to explain your options thoroughly and help you permanently resolve your tax problem.
Contact us today for high class customer services.
We offer a wide range of services:
- Tax Returns
- IRS Payment Plans
- Tax Relief Program
- IRS Debt Forgiveness
- And More