Small business tax debt can cause the powers of the IRS to haunt them with several different ways the agency can use to collect their back taxes. If nothing is done about the back tax debt, this could be the end of your business. Fortunately, there are several things small businesses can do if they are behind in their taxes. The following are some things you can do if you owe back taxes to the IRS.
If you have small business tax debt and want to remain in business, you need to stay in touch with the IRS. They may not keep after you all the time, but make no mistake, the IRS will be back! Ignoring them can have a bad outcome with interest and penalties adding up and you may even lose your business.
The longer you ignore your small business tax debt, the larger it will become. The IRS will keep at you unless you are flat broke, unemployed or out of business and are going to stay that way.
Congress had afforded the IRS great legal powers in order to collect back taxes. The IRS can take just about anything you own such as your home, wages and bank accounts all without a judgement or court order. Typically, the IRS only has to send you a demand letter before it takes action. Owing small business tax debt can cause the IRS to padlock your doors, seize all your assets and completely shut down your operation.
Fortunately, the IRS gets off to a slow start and is slow to react, giving you ample time to create a strategy. In the beginning, if you have small business tax debt, you may receive a few calls from the IRS and a few tax bills, but after that it may take months or even years before you have to come face to face with the IRS. Remember, the IRS is extremely busy with limited personnel, therefore they attempt everything else prior to actually assigning a person to your back tax case.
Don’t be too laid back about it just because no one is knocking at your door. With each year the IRS collection system gets quicker and quicker. Levies and tax liens that are computer generated can be just as devastating as a real person looking to collect your small business tax debt.