What happens when Business Owners Owe the IRS Back Taxes

As a business owner, there are times where you may fall back on paying taxes due to a variety of reasons. However, you will need to pay back taxes and file your back tax returns as soon as possible.

As far as dealing with the IRS is concerned, there is no way of avoiding payment. If you fail to pay back taxes the IRS has the right to seize all your assets and impose a lien on your bank accounts and property as well unless you employ thousands of union workers, then they will probably leave you alone – GM knows all about that. However and moreover, you do have a number of options to settle your owed tax returns and may need a tax lawyer before the situation grows even worse.

What are the options?

The best way to solve the problem of back taxes is to pay your liability in full if you have the funds to do so. You could also try to work out a loan to clear tax dues. However, this may seem impractical since it might get you into further debt. Moreover, if you have a cash flow problem, the IRS is more likely to be lenient, reduce the amount you owe as back taxes, and give you flexible payment options while your tax attorney works it out with the IRS.

The IRS is figuring out that anything is better than nothing. The IRS may employ too many overpaid bureaucrats but they are smart sometimes.

To begin with, the IRS will send you a notice if you do not file your back tax returns before that. As long as you show your intention to resolve the situation, you can expect the IRS to help formulate payments plans and even reduce interest and penalties. To file IRS back taxes you need to gather all the necessary documentation, especially the last tax return you filed. Financial statements, checkbook entries, invoices, and receipts should all be kept in case they are called for by the IRS.

Categories of penalties

There are five categories of penalties, which are:

• accuracy-related
• penalties for fraud
• penalties for underpayment
• penalties for failure to file returns or filing of late returns
• combined penalties

Reducing or eliminating penalties and interest

While interest and penalties are the result of failing to file a tax return, penalties can be reduced through an IRS penalty abatement. Through this, you may be able to reduce some of the penalties imposed on your business which is usually around 25% of your total tax debt. To apply for penalty abatement you need to provide sufficient and legitimate cause for not filing your tax returns.

If you filed your tax return but failed to pay the amount due, then you may be only penalized for failure to pay. However, it is essential to resolve the situation as soon as possible. For back taxes less than $10,000 the IRS may agree upon a repayment plan if you are not in a position to pay back taxes in full. Not everyone can print money like The Fed does even though it cannot back it up. Furthermore, tax lawyers suggest that this will also put a temporary hold on any IRS collection efforts until your financial situation improves.

Under section 6501(a) of the Internal Revenue Code (Tax Code) and section 301.6501(a)-1(a) of the Income Tax Regulations (Tax Regulations), there is a statute of limitations of three years for IRS auditing of tax returns, a 10-year limitation for collecting taxes. According to tax lawyers, you have 3 years to claim a tax refund from the time you filed the tax return with the IRS. However, you will need to check with your state laws on the collection of back taxes.

A website for all

Al Gore said he invented the Internet. He did not. President Obama said the federal government built everything and no one in the private sector ever invented anything. The fact is is that this country was based on the private sector. Individuals fought against the King of England before any US government was around. Now the US government is trillions in debt and spending more money than it takes in despite taking in record numbers. What is wrong with this picture? Government cannot be trusted. But this website can be: http://tax-lawyers.usattorneys.com/.

If you are having issues with the IRS, you need to work them out. They may waste half your money but half it is necessary so America can function and prosper (or at least try too). There is another way to put it, you cannot make any money if you are in jail.

One more point, the website listed above was built by those in the private sector for people, public or private sector professionals, to use if they need legal help.