Apr
22
Don’t let your small business be under the gun of the IRS – Know how to tackle tax debt
All the small business organizations with tax debts usually face the daunting powers of the IRS and the various steps that they take in order to recuperate the overdue taxes, many of which could even spell the end of the business. Owing money to the IRS is not similar to owing money to the private financial institutions as the procedure of collecting the debt is not similar and the former’s method can even get harsher. Luckily, most small business organizations that are behind on their taxes are able to work out an alternative repayment plan with the IRS, provided they know the ins and outs of tackling the formidable collection machine. There are few points that you need to keep in mind if you owe money to the IRS.
Stay in touch with the IRS is important
If you’ve accumulated delinquent business tax payments and you’re still eager to stay in business, the most crucial thing that you need to remember is that you need to stay in touch with the IRS. Although you might find situations when the agency will leave you alone for a while but you need not worry as they will again come back to you, probably at the most inappropriate time. If you make the mistake of avoiding the IRS, the consequences can be harsh; you will rack up huge penalties and might even lose your business.
The collection powers of the IRS: Congress has given massive legal powers to collect the past due taxes to the IRS. The IRS has the power to seize just about anything that you owe, including your home, wages and your bank account. More interestingly, the IRS won’t require any court order or judgment before closing your business and seizing your property. In most cases, the IRS requires sending you a form “demand letter” before it acts and in special cases, the IRS isn’t forced to give you any kind of warning. The IRS can close down your operation by seizing the assets, inventories, desks and can even padlock your doors.
IRS is slow on its side- Is time on your side?
On the positive side, the IRS collection machine is very slow to get things started and also slow to react once everything gets started. This gives you enough time to strategize. You would probably get a number of tax bills and also get some harassing IRS telephone calls, but you might get to meet IRS face to face several years later. With limited personnel, the IRS will try every other option before it assigns a person to check your case. However, you shouldn’t be too comfortable since no one is knocking at your door. With each year, the system of the IRS is getting faster.
Beware of the IRS threats
The IRS often threatens to close down your business organization but you can be sure that seldom does this threat become a reality. Among the few instances when IRS lives up to the threats is when the business owes unpaid payroll taxes. There are many cases in which you should be cooperative and you should provide financial information that an IRS collector will ask for. Never lie to the IRS as things can get worse in this way.
Get an offer in Compromise by negotiating with the IRS
Although this is a popular option, but one in four business organizations can finalize the deal with the IRS to settle the tax bills and get a portion of the balance waived off. Requesting an offer in compromise is a lengthy and daunting process where the business has to offer a detail of the entire financial hardship that one is going through. Only if the IRS believes that it is unlikely to collect more debt in the near future, it will likely accept the OIC offer.
Thus, when you’re already drowning in a sea of credit card debt and you’re running to the debt management programs for help, you shouldn’t increase your burden by accruing your tax debt. Take the above mentioned steps into account so as to eliminate your business tax debt burden and emerge successful.
