Dealing With Tax Debt: Advice For SME Owners
Without a doubt, getting a letter from the IRS is one of the of the biggest fears for any SME owner, or anyone in fact. If your business is subject to an IRS investigation, there’s a good chance you’ll face a grilling. It’s also likely you’ll come out on the other side owing more tax. You might also even pick up a few fines for your troubles. The result can cripple any SME. And it can be a scary time, the IRS is renowned for flexing their muscles when it comes to collecting their debts. The big question is: What can you do about it?
Don’t Let It Happen In The First Place
The best way to avoid any investigations from the IRS is to be honest and always create accurate tax records. Try to avoid leaving it until the last minute before filing, and think about using accountancy tax software. There are some excellent products out there that make it very easy for business owners to avoid problems. This won’t stop you from being investigated, but it will help you be thorough with all your financials.
Don’t Run Away
Once the IRS gets their teeth into an interesting case, they rarely let go. Don’t try and hide from them, you’ll just be doing yourself more harm. The fact is you have to pay back your debts, and avoidance is just going to lead to even more debt. You will accrue interest and fines, and you’ll also face the enormous collection powers of the IRS. They can pretty much seize whatever you own, and the result could be the end of your business.
Get Some Help
Don’t be afraid to challenge the IRS’s judgement if you think it’s unfair. We suggest that you discuss your tax issues with a tax attorney who will work with you to see if there are any settlements available. You might also be able to claim for tax relief or an Offer in Compromise. The point is you have to take the situation into your own hands, but you’ll also need a little help along side you. An experienced tax lawyer might be the difference between a few tough years and being destroyed as a business enterprise.
Request A Payment Plan
Payment plans should be made available to you if you can prove you can’t pay everything right away. It can still be expensive as you’ll accrue additional interest charges and penalties, but it is a more affordable way out. If you are in dire financial straits, you can also consider applying for an uncollectible status. This is where the IRS agrees to leave you alone for a set period. You will still owe the tax, they always get their money after all, but it will give you some time to get your business together and make a sensible plan of action.
Bankruptcy can sometimes wipe out some, or all of your debts. It is a complicated process however, so make sure you speak to a financial or insolvency expert. Only use the bankruptcy option as a last resort as it will have a significant impact on your life.