It is not a good news; the IRS has been rising again with a focus only on audits and collections. Another thing, it appears that a big focus is going to be on business owners. If you have been recently avoiding IRS notices regarding tax debt, you may want to think about taking numerous steps to resolve it. If not, your business, as well as personal life, might become a lot more complicated and stressful. Nevertheless, the IRS has huge powers, for instance, to seize the assets. Here are some of the steps, which can be taken with your IRS tax debt:
Know Where You Stand
Carefully review all of your IRS letters along with your tax returns. It should not come as a surprise that the agency might have made some mistakes. This means that you might ultimately reduce the debt you have. Even though it is usually a good idea to get support from a tax professional, these potential savings you gain might be so much more than the fees that you are going to pay.
Negotiate the Penalties
Tax penalties can spiral out of hand very quickly. This is the reason why you should act very swiftly when you deal with IRS debt. However, you might also be able to negotiate with your agency to lower and, sometimes, even eliminate the penalties, if you show reasonable cause. Examples of this can include serious illness, difficult financial circumstances, and/or the destruction of your home or the business you are running. The IRS, furthermore, has a program that offers relief to those who have gotten in trouble with the agency for the very first time.
Payment Plan for Business Debt
After you know how much you actually owe, you can easily put together a working plan. One of the most common approaches is to set up an installments agreement. This arrangement might last for as long as 6 years (all payments should be made on a monthly basis with interest or the penalties will continue to accrue). Remember, this kind of an agreement is going to put a stop to actions such as liens and levies. If you are indebted to $50,000 or less, then this process is most likely to be forthright. This can be done online; however, you are going to be in compliance with the IRS, for instance having made the tax filings, deposits and the withholdings.
Reduce Business Expenses
You should always take a look at your operating costs. Figure out the expenses you might be able to deplete versus the services required for the daily operations of the business. For instance, are you going to pay for a subscription which you can make use of infrequently? Are there some professional memberships which you can suspend temporarily until you get the financial house back in order? Consult a professional accountant or use accounting software to predict the financial impact it would have on cutting the costs.
You have most likely seen TV advertisements where the representative makes the claim that you can settle your IRS debt at “pennies on the dollar”. Does this sound too good to be true? Yes, indeed this is most often the case. However, the IRS does have a thing called the “Offer In Compromise or the OIC. This allows you to pay off your business debt at a discount. This process involves releasing financial information with the forms 656 and 433. This will furthermore determine the amount which the IRS considers livable without causing financial restraints on the users. Please note, the IRS rejects numerous submissions. It is a very good idea to get the help of a tax professional who has the complete knowledge of filling paperwork along with navigating the IRS bureaucracy as well.
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