Business Owners: Owe Back Taxes? Actionable Steps for Facing IRS Debt

Entrepreneurship can be hard. Some years are good, others are not so great.
But every year, like clockwork, the IRS comes calling and asks you for what’s

Small businesses often face unexpected financial challenges. Among the scariest
of these challenges is unpaid taxes. Although the IRS may appear patient
initially, resting on one’s laurels can be a perilous decision. Once the IRS gears
into action, they are known for their relentless pursuit and uncompromising
measures. They are the most brutal collection agency on the planet.
So, if you find your business in this situation, it’s paramount to be proactive.
Here’s a comprehensive guide to help you correct the course.

Note: If the IRS claims you owe $10,000 or more, contact our firm
immediately for a consultation and learn about your tax debt relief options


1. Don’t Ignore The IRS
The first step is paying attention and taking action. You might not agree with
the IRS but you can’t leave them in your pile of unread mail, or worse
unopened mail. Recognize the gravity of unpaid taxes and understand that it’s a
liability that won’t just dissipate. The sooner you confront the reality, the
better you can strategize a solution.

2. Open Lines of Communication:

Ignoring IRS notices can exacerbate your situation. Instead, get proper
representation from a qualified tax relief firm and have them engage with the
IRS on your behalf. Firms like ours have dealt with the IRS many times before.
Timely responses showcase your commitment to resolving the issue and the right
firm will guide you through every step of the process.

Owing 941 payroll taxes is double jeopardy. Not only can the IRS levy and
lien your business income and assets, they can pierce the corporate veil,
without a court order, and go against you personally.

3. Understand Penalties and Interest:
Unpaid taxes don’t just stay static; they accumulate penalties and interest over
time. With current IRS interest rates hovering at 8%, compounded daily, each
day you procrastinate is costing you big time. Familiarize yourself with the
accruing amounts to grasp the full scope of your liability. The more time you
let pass, the higher the penalties and interest will be.

4. Consider Installment Agreements:
The IRS often allows businesses to pay their tax liabilities over a period in
monthly installments. If you can demonstrate genuine inability to pay the lump
sum, they might consider an installment agreement. This can help in
managing cash flows and ensuring business operations aren’t severely

5. Offer in Compromise (OIC):
In specific circumstances, the IRS might accept a reduced amount to settle the
entire debt. Known as an Offer in Compromise, this option is contingent on
demonstrating you cannot pay the full tax liability over the remaining 10-year collection statute. The right tax resolution firm will help you explore this
option if you’re qualified for the program.

6. Temporarily Delay the Collection:
If your business is in a dire financial situation, the IRS might temporarily delay
their collection efforts. While this offers a short-term reprieve, it’s essential to
use this time wisely and strategize a long-term solution.

7. Seek Professional Assistance:
Engaging with a tax resolution firm can be invaluable. They can guide you
through the intricacies of tax laws, help keep your business open, negotiate
with the IRS on your behalf, and help formulate a plan tailored to your unique

8. Preventative Measures:
While addressing current unpaid taxes is vital, implementing systems to avoid
future discrepancies is equally crucial. Regularly review your finances, maintain
clear records, and stay updated with tax regulations. Make quarterly estimated
payments and be proactive throughout the year by creating a concrete plan
with your qualified tax resolution professional.

Unpaid taxes are a looming storm cloud for any small business owner. While
the IRS might seem lenient initially, their eventual intervention can be
formidable. By acknowledging the debt, communicating promptly,
understanding your options, and seeking professional guidance, you can
navigate these challenges effectively. Remember, in the realm of taxes,
proactive action is always better than reactive measures.

If you’re facing IRS problems and owe $10,000 or more in back taxes or are
being audited, reach out to our tax resolution firm, and we’ll schedule a free
and confidential consultation to explain your options thoroughly and help you
permanently resolve your tax problem.