Even though most business owners pay their taxes on time, things happen and you might have to decide between paying your bills and the IRS. Though you should do everything that you can to avoid missing a payment to the IRS, there are unfortunately difficult times when you can’t do anything about it.
So, what happens if you miss a payment?
The IRS can levy your assets, seizing the cash in your bank accounts. They can also put a lien on your assets which means that your business and the assets can’t be sold until you settle up with the IRS.
Though you might prefer a lien on your business, it can really affect your credit rating.
The IRS will give you some time to pay your back taxes. However, if you don’t do anything to show that you are putting an effort into paying up, an agent will be assigned to your case.
He or she will visit you regularly until your taxes are paid up.
Even worse, the IRS can shut your business down. There are cases in which they have filed criminal charges for tax evasion.
So, what can you do to pay your taxes back?
1. Look into an “offer in compromise.”
An offer in compromise is often thought of as a fresh start, allowing you to settle up for less than you owe. However, there is a catch. Once you pay up, you have to stay compliant in all tax filings from now on.
There is a process that you must follow so it is important to consult a tax professional to help you. You need to fully disclose many details about your life and business including your assets, income, liabilities, expenses, and much more.
Once the IRS receives your proposal, they will go through it and decide whether or not they will accept it.
2. Talk to the IRS about a payment plan.
If you owe less than fifty thousand dollars and believe that you can pay it all back in less than six years, you might be able to use a streamlined payment plan process.
You can do this several ways. You can submit it online or you can call them directly.
You can use the number that is found in the notice that you receive or you can call (800) 829-4933. This process is usually simple and the IRS won’t need much of your financial information.
3. If you do not qualify for a streamlined payment plan, you may be able to get a longer payment plan.
In order to get a longer payment plan (or if you owe more than fifty thousand dollars), you will need to come up with a payment plan that works for both you and the IRS. You will be required to submit financial statement forms, along with their supporting documents, in order to come up with a payment plan that will help you get caught up.
4. If you have any questions about your back taxes, you need to contact a professional.
A tax professional who is experienced in settling debt on back taxes, can help you through this process so that you don’t feel so alone. Together, you can work with the IRS to ensure that your back taxes are taken care of.
If you are behind on your taxes, it is important to work with the IRS to get caught back up. The best thing that you can do is consult a tax professional to help you through this difficult time. He or she can help you talk to the IRS to come up with a payment plan that works best for all of you.
Contact us for all of your bookkeeping and accounting needs. We would be happy to help your business, both at tax time and throughout the entire year!
We will also help you so that you are more prepared for the future.