When your business owes the IRS money, a flow of consequences follows you around until the tax debt is paid. The IRS will withhold any upcoming tax refund to which your business is entitled until the overdue tax is paid, in addition to charging interest on the amount.
Your Business Owes Back Taxes: Here Are Your Next Steps
If your business is behind on taxes, consider these steps so you can get back on track and reduce the amount of damage done to you and your business.
Respond Promptly To The IRS
One crucial thing to remember when you owe back taxes is that you must keep in touch with the IRS. Even if you’re not able to afford your taxes, keeping an open line of communication with the IRS will save you a lot of potential penalties and interest increases. It’s a normal reaction to ignore IRS notices thinking it may go away but it’ll bite back ten-fold and put yourself and your business at a higher risk.
The IRS sends out notices to participating taxpayers who owe back taxes, if you’ve received these letters, it’s good to practice being proactive and responding to the IRS letter right away with the information they request from you. It’s super crucial and important to show that you are willing to work with the IRS to handle your tax debts very seriously.
Set Up A Payment Plan
Once you receive the IRS letter, the next step you should consider is to actively set up a payment plan with the IRS. If it would help your situation, you should consider asking the IRS for a short-term or long-term payment plan. Keep in mind that the interest and penalties are still going to be accumulating during this time.
Request For Currently Not Collectible Status
You may request to be temporarily placed on “uncollectible” status on your account if your business’s financial situation is really poor. You’ll still owe taxes and penalties and interest will continue to accumulate but the IRS won’t engage in collection efforts against you while you’re on Currently Not Collectible status.
Alternatively, Consider An Offer In Compromise
Requesting an Offer In Compromise is a formal process in which the business fills out IRS Form 656, Offer In Compromise, which provides detailed information about the business’s financial situation and requests that the IRS settles your tax liabilities for less than the full amount that you owe.
What Filing Bankruptcy Can Do For You
A business owner can benefit from filing bankruptcy because it can help minimize personal liability after the business shuts down. Many individuals find that filing for bankruptcy may not only help reduce or wipe out some of their tax debt but also help them start over financially. Although filing bankruptcy is never something you should take lightly, it may end up being the business’s last resort if they owe a lot of back taxes.
The IRS Fresh Start Program
There are many programs that are offered in order to solve your tax-related issues, federal or state. If you owe a large amount in back taxes, consider setting up payment plans with our IRS Fresh Start Program. This program is designed to be compliant with the IRS but also get you back on track with your back taxes. It does this by making sure you are filing accurately and gives up-front payment options solutions for those who can’t afford their tax debt payments. We offer two of the four major components in the IRS Fresh Start Program called, Currently Not Collectible (CNC) and Offer In Compromise (OIC).
Resolve Your Tax Bills
If you’ve found yourself in a nasty mess with the IRS, take a deep breath. For taxpayers who may have difficulty paying off an excessive amount of tax debt, there’s a new and improved relief program that consolidates many major relief programs into a one-size-fits-all assistance program. Any issues regarding back taxes, unfiled years, or any other tax-related problems may be solved through one program; the IRS Fresh Start Program!
Considering that the Fresh Start Program is a federal program, you would think meeting the qualifications may be very difficult, but really, it’s a lot simpler and quicker than you think. Take the following steps in order to find out if you are eligible in as little as 3 minutes.
- Fill out some basic information about yourself and your back taxes here.
- Have a representative reach out to you to discuss your eligibility.
- Go through the enrollment process and finally reduce or eliminate your tax liabilities.