If you are a small business owner struggling to pay back taxes, do not throw your hands up in despair. There is light at the end of the proverbial tunnel.Many small business owners have access to numerous tax debt relief programs that are similarly available to individual taxpayers. Let’s take a look at a few.
Installment Payment Agreement
If you owe $25,000 or less in back taxes, you have the option to apply for an installment agreement online using the IRS’s Online Payment Agreement (OPA) application. If your business tax debt, including penalties and interest, is in excess of $25,000, you have the option to apply for an installment agreement by submitting Form 9465 (i.e.,“Installment Agreement Request”).
If you owe less than $25,000 in payroll tax debt, you have the option to apply for an In-Business Trust Fund Express Installment Agreement (IBTF-Express IA). This option provides your business two years (or up to the statute expiration date if that comes first) to pay the back taxes in full.
Offer in Compromise
In addition to applying for an installment agreement, you could also consider an offer in compromise (OIC). This is a different type of an agreement where you have the option to settle your tax debt with the IRS for an amount that is less than you owe. In general, the IRS will not accept this type of offer if your business generates a sufficient amount of income where you have the ability to pay the full amount owed via an installment agreement or by selling assets to pay off the back taxes.
To begin the OIC process, submit an application and include an offer based on your ability to pay. This is done by submitting a completed IRS Form 656 along with a $205 application fee and a Collection Information Statement to support your offer.
If your business is a sole proprietorship, you will need to complete Form 433-A (OIC), Collection Information Statement for Wage Earners and Self-Employed Individuals. If your business is a partnership, LLC, or corporation, you need to complete Form 433-B (OIC), Collection Information Statement for Businesses. It is important to note that the IRS does not allow a compromise on your individual share of a partnership’s debt. Instead, the partnership is required to submit an offer based on its ability to pay and the ability of each partner.
It is important to keep in mind that the compromise offer you submit needs to include an initial payment, unless you meet the IRS’s Low Income Certification guidelines. If you choose a lump sum payment option, you will be obligated to send 20 percent of your offer amount along with your application, then pay off the remaining balance within five months of the date the IRS accepts your offer (and in five or fewer payments).
You also have the option to choose a periodic payments option to pay the balance in monthly payments over a period of six to 24 months. If you choose this option, you must continue to make payments while you are waiting for the IRS to respond to your offer. In general, the IRS does not return payments made on a proposed offer in compromise, though there are exceptions.
Looking for Tax Debt Relief? Contact the Highly Reputable Anderson Bradshaw Tax Today
If you are struggling with tax debt, the professional tax consultants at Anderson Bradshaw can help you through your unique tax situation. With over 30 years of experience in the industry, we have seen almost every tax issues and have learned the best ways to handle each one accordingly. You can feel confident knowing your struggles and difficulties with the IRS can be resolved and corrected quickly and efficiently at Anderson Bradshaw Tax Consulting. For further information or to schedule a consultation please contact Anderson Bradshaw Tax Professionals at 877.584.7509 or visit www.AndersonBradshawTax.com to learn more.