Tax debt can be a significant burden for small business owners, often complicating financial stability and growth. However, you don’t have to face this hardship alone.
The Internal Revenue Service (IRS) offers a variety of solutions to tackle tax debt, and in this article, our professionals at Anderson Bradshaw Tax Consulting will provide an in-depth exploration of how you can take advantage of these tax debt relief strategies.
By understanding these options, you can effectively manage your tax liabilities and maintain a healthier financial outlook for your business.
Understanding Tax Debt for Small Businesses
Small businesses can accumulate tax debt from various sources, such as unpaid income taxes, payroll taxes, and business taxes. Failing to address tax debt promptly can lead to severe consequences, such as penalties for late filing and late payments or interest on unpaid taxes.
In some cases, the IRS can place a lien on your property, which is a legal claim against your assets, making it difficult to obtain credit and potentially encumbering your property. In more severe cases, the IRS can levy your assets, which means they can legally seize your property to satisfy the debt, significantly disrupting your business operations.
Given these risks, it’s crucial for business owners to take proactive measures to manage their tax debt. Ensuring timely payments, maintaining accurate financial records, and consulting with tax professionals are essential steps. These measures can help identify and resolve issues early, avoiding the severe repercussions that come with delinquent tax debt.
Exploring the Most Common Tax Debt Relief Options
If your small business is struggling with tax debt, several options are available to manage and alleviate this hardship. Some of the most common relief tactics include:
Installment Agreements
These agreements allow businesses to pay their tax debt over time, rather than in a lump sum. There are short-term plans for those who can pay within 180 days and long-term plans for more extended repayment periods. Extended-term plans offer flexibility based on the business’s ability to pay, determined by an evaluation of income and expenses by the IRS.
Offer in Compromise (OIC)
This program enables businesses to settle their tax debt for less than the full amount owed if they could demonstrate financial hardship. There are three types of OICs:
- Doubt as to Collectability: When the taxpayer’s assets and income are insufficient to pay the debt within the statutory period.
- Doubt as to Liability: When there is a genuine dispute about the amount of the tax debt.
- Effective Tax Administration: When paying the full tax debt would cause significant financial hardship despite the ability to pay.
Currently Not Collectible (CNC) Status
This status temporarily defers tax payments for businesses facing financial hardship. The IRS assesses the business’s financial situation annually to determine when repayment can commence, while interest and penalties continue to accrue during this period.
Navigating Your Tax Debt Relief with Confidence
Dealing with back taxes can be overwhelming, but small business owners don’t have to face this challenge alone. Professional assistance can make a significant difference in effectively managing tax liabilities and securing a stable financial future for your business.
Our tax relief consultants at Anderson Bradshaw specialize in providing tailored tax debt relief strategies that align with the unique needs of small businesses. To benefit from these tax debt relief programs, get in touch with Anderson Bradshaw Tax Consulting today.
Holding over 32 years of experience in the industry, our tax relief consultants at Anderson Bradshaw have handled a wide variety of tax situations. For further information or to schedule a consultation, contact Anderson Bradshaw Tax Consulting at 877.550.3911 or visit www.AndersonBradshawTax.com to learn more.