If you are running a small business, you have something that digs into your pocket every year, it’s the IRS. Unfortunately, you don’t get to choose whether the IRS can do so. By law you have to pay taxes and you have to file reports – tax returns – at specific times of the year. The IRS wants to know what you are doing, how much you are earning, and most importantly how much you are paying in taxes. Because some people cheat and others don’t pay, the IRS has gotten aggressive. While the audit rate for individual returns is about a little less than 1%, the audit rate for small businesses can be as much as 10 times higher.

It does not matter if you operate as a sole proprietor and use Schedule C to claim your income, or if you are set up as a C-corp, S-corp, or LLC – the IRS is watching what you do. It monitors whether you report all of your income reported by third parties as paid to you. Every year if they think you are not paying your fair share, they will certainly come calling. When that demand letter from the IRS arrives, knowing what to do next can make all the difference. The more you educate yourself, the easier it will be to deal with and eliminate tax debt.

Note: As a tax law firm, we always recommend that you reach out to a professional who knows the rules and will aggressively negotiate and defend you against the IRS. If you owe back taxes or are under audit, our firm can help negotiate with the IRS and potentially settle your tax debt. Call us today. Our tax attorneys can navigate the IRS maze so that you have nothing to worry about. 

Small business owners are increasingly the target of enforcement efforts by the IRS. If you end up owing money to the IRS, it does have some programs to make paying easier. In some cases those small business tax relief and tax resolution programs let you settle for less than what you owe. However, qualifying is not as straightforward as you might think.

For businesses that may be eligible, the assistance of a tax attorney is absolutely critical. Remember, you as the owner of a business can be personally held liable for payroll taxes regardless of what kind of business entity you may have. As tax attorneys we can help guide you through the process and make sure you qualify, so you can rest a little easier and get back to building your business.

Payment Plans/Installment Agreements

If the amount your small business owes to the IRS is relatively small , paying off your tax bill as quickly as possible makes sense. You avoid penalties and more interest. However, many people don’t have the ability at once to immediately pay all of it. If paying in full would be a hardship, the IRS does offer payment plans. Setting one up can make paying back what you owe easier and more financially palatable. However, not all payment plans are the same. You have to have enough to be able to keep operating your business. Many times that means a slow and steady payment plant is what is really needed.

Keep in mind that interest will continue to accrue while the debt remains outstanding. That is something to think about. However, it is just one of many factors that have to be weighed. So, getting the right payment plan is critical to solving your tax problem if you cannot pay all at once the taxes owed.

Offer In Compromise

If you’re under a lot of financial hardship, it may make more sense to try for an offer in compromise, a special IRS program that could allow you to pay back less than you owe.

The offer in compromise program is a popular one with individual taxpayers and small business owners. If paying the entire amount would create a financial hardship for you, your family, or your business, a tax attorney can help you make the case to the IRS that you deserve a break.

Fair warning, the IRS just doesn’t agree to accept a set percentage on the dollar of what is owed. You can’t just throw a number out there and see if the IRS will accept it. It doesn’t work that way. There are lots of standards applied and considerations made by the IRS in evaluating an Offer in Compromise. The devil is in the details. If something sounds too good to be true, it likely is too good to be true. If someone hasn’t done the work necessary to work up your individual situation, they can’t know whether this is a viable solution. The Offer In Compromise program can be a great solution in the right case. A skilled tax attorney can evaluate whether this is right for you.

What’s the best option?

Each of these options has its pros and cons, and it is important to understand how these programs work and who qualifies to use them. If your small business is in trouble with the IRS, taking the right action right away could reduce the amount you owe, give you some breathing room and allow you to focus on your customers – not on your taxes.

Running a small business has its challenges, but those difficulties are nothing compared to the stress and anxiety small business owners feel when dealing with the IRS. Many when faced with the IRS have not had a good night’s sleep in months. With so many small business owners now in IRS crosshairs, it has never been more important for small business owners, freelancers, gig workers, and the self-employed to have an advocate in their corner.

If you find yourself on the wrong end of an audit, a tax bill, or an enforcement action from the IRS, the steps you take next are absolutely critical. Trying to take on the IRS on your own is dangerous and potentially expensive. You not knowing a rule, regulation, requirement or deadline could literally ruin the rest of your life. You are gambling with your future if you try to represent yourself. A tax lawyer works to protect your future.

By working with a tax lawyer, you can gain access to vital information about small business settlement programs the IRS offers. You can gain access to the knowledge, skill, and ability by hiring a tax lawyer. Time is of the essence when the IRS comes calling, and with the interest and penalty clock ticking you do not have one second to waste. Call us, tax attorneys, for a case evaluation.