A Quick Guide on How to Handle Tax Debt and Avoid Future Issues

What if tax debt wasn’t an albatross around your neck?

When it comes to your business finances, tax debt can be an extreme burden. But once you know how to deal with that burden, you can avoid tax issues altogether in the future.

Wondering how to handle tax debt and avoid future tax issues? Keep reading to discover our quick guide!

Get On a Payment Plan

For as complex as business taxes can get, business debt remains relatively straightforward. The IRS tells you how much money you owe and you either pay it or you don’t!

Issues come up when businesses can’t pay the entire amount they owe all at once. But after consulting with a tax professional, you can contact the IRS and get on an IRS payment plan.

As the name implies, a payment plan helps you pay your debt off in smaller and more manageable chunks. Keep in mind that the debt will accrue interest until it is paid off. But if the IRS has taken out a tax lien against you, successful consecutive payments may convince them to remove the lien.

Request an Offer in Compromise

If you can’t pay the amount you owe and don’t want to get on an IRS payment plan, there is another potential solution. And that solution is to request an offer in compromise from the government.

Basically, an offer in compromise means that you negotiate to pay back less than the amount you owe. While that sounds great, keep in mind that the IRS is likely to accept less than half of the offer in compromise applications they receive each year.

There are also some strings attached to this compromise. To be considered, you must be current on your taxes and you must have already paid your estimated tax payments for this year.

Business Finances and Tax Levies

You may have noticed that these options all involve making contact with the IRS. That’s because if you don’t make an arrangement and you don’t pay your debts, the government will eventually put out a tax lien and exercise a tax levy against you.

With a levy in place, the government can take extreme measures to get their money back. This ranges from garnishing your wages to freezing your bank account and even seizing your property.

Generally speaking, you want to avoid liens and levies by coming to an arrangement with the IRS sooner rather than later.

Avoiding Future Tax Debt and Issues

For your business finances, it’s one thing to take care of yesterday’s debts. But you must also make sure to avoid any further tax issues in the future.

Here at Sterling Tax & Accounting, we offer a full range of accounting and tax resolution services. Whether you need to deal with liens or levies or make the best possible case to the IRS, we are here for you.

To see what we can do about your current tax situation, contact us today!