Receiving a demand letter from the IRS for your business can be overwhelming, and you may be tempted to ignore it. However, you will be much better off if you tackle this problem immediately.
IRS tax collectors have a wide variety of tools they can use to extract owed tax money from your business, up to even seizing your business itself. Furthermore, even when you cooperate, you will likely end up owing the original amount of your tax debt plus interest, which typically compounds at a rate of up to 14%. Ignoring the problem can therefore leave you worse off than taking immediate action.
Do not despair, though. There are several options for resolving a tax issue for your business with the IRS. Review these key options in IRS tax resolution for your business to learn which options could be best for you.
Keep in Touch With the IRS
If you discover that your business is behind on taxes, it is critical to stay in touch with the IRS about the issue. As we have already noted, the consequences of ignoring a notice from the IRS can be dire. Over time, the taxes you owe can accrue additional penalties and interest.
The first step is to review all of the correspondence you have received from the IRS, as well as your tax returns. Make sure that the IRS has not made mistakes: if you notice errors, this could help to reduce some of the debt that your business owes.
Put Together a Payment Plan
Once you have clarified how much you owe, you may be able to work with the IRS to put together a payment plan. This could be in the form of an installment agreement, in which your business pays back the debt on a monthly basis over a pre-agreed period of time up to six years. Agreeing to a payment plan will help you avoid actions like levies and liens. However, note that interest and penalties will continue to accrue.
Make sure that you have filed your tax filings and made all withholdings and deposits. Additionally, make sure that you understand all of the terms of the agreement so that you do not end up in violation.
IRS Debt Resolution Alternatives
The IRS offers several debt resolution alternatives. For example, the Industry Issue Resolution (IIR) resolves tax issues through the issuance of guidance. The Pre-Filing Agreement Program (PFA) encourages taxpayers to request consideration of issues prior to filing and can help resolve problems earlier on in the process. The APMA also helps resolve potential issues in a cooperative and timely manner.
Hire a Professional Tax Resolution Service
You may be best served by working with an experienced tax attorney or certified public accountant (CPA) through a professional tax resolution service. Such a service can advocate for you and help you work through complicated cases. Additionally, they will ensure that you do not leave any money on the table.
Get to work now resolving your IRS tax issue through these options.