5 Things to Do When You Can't Pay Your Business Taxes

Most up-and-coming entrepreneurs tend to focus on the brighter side of their business plans. They have no idea what to do if their business revenue nosedives and they can't afford to pay an unexpectedly large tax bill. This is a common problem, though. Even veteran business persons receive unexpectedly huge tax bills. No matter how you adjust the numbers, your tax returns show you owe Uncle Sam quite a huge amount of money. The good news is that this happens all the time, and the IRS cannot collect money where there is no money.

Don't worry if you are slapped with a large tax bill that your business cannot afford to pay. Here are five things you can do about that.

1. Double take

When you get hit with a surprisingly large tax bill, the first thing you want to do is to confirm whether or not it's accurate. Undoubtedly, the IRS can make mistakes. You could have made the mistakes yourself or missed out on taking tax credits and deductions. You can hire a tax professional to review the returns on your behalf.

Once you ascertain that your tax bill is accurate, see if you can eliminate or minimize some penalties. You can eliminate your penalties if you give acceptable reasons such as:

●  Serious illness
●  Your business or home was destroyed
●  Bad tax advice
●  You have suffered a difficult financial situation

2. Communicate to IRS about your situation early and often

Be mindful that this will take a considerable period of time, as you would most likely have to wait for an IRS official to be available. Prior to any deadlines, contact the right IRS feature to request the payment arrangement you have selected. Provide the requisite details to the IRS in order to conclude the arrangement.

Letting the IRS know about your situation early enough, and keeping them updated about your status can save you big trouble. Don't be tempted to leave everything in the air as an investigation can be started, and you could lose much more money.

In comparison to mailing out paperwork or contacting the IRS, applying for this kind of arrangement will save corporations substantial time. What you need to do is fill out the application online. And, you don't have to wait to see whether or not your application is approved-you are told if your application is accepted as soon as you apply online.

3. Negotiate a payment plan

You can agree on an installment agreement with the IRS, where you can make monthly payments for up to 72 months. However, just like an installment loan, interest and other fees apply. You can choose any installment plan which suits you. Regardless to which alternative applies, originally spending as much as possible is always a smart idea. This is because you are on the hook for an installment deal with interest and fees.

4. Ask for a discount

Sometimes the IRS moves slowly, and you may not get your bill for the unpaid taxes until months or years later after the tax is due - hence the shock of receiving an unexpectedly large bill we mentioned above. However, you would be surprised how easy it is easy to request and get a discount. The IRS is only interested in collecting taxes originally owed, and fines and interests are a way of encouraging people to pay their taxes.

5. Ask for an 'Offer in Compromise'

There is not much difference between the offer in compromise tool and discount, but the good news is you can get both of them at the same time. If you can convince the IRS that you will be forced to shut down or you will cause undue economic hardship to your company, if you pay off your tax bill, you can get your tax burden incredibly reduced.

To pay your taxes little by little per month, you may apply for an installment plan. You are not liable for paying the lump sum at once in any way. If you handle corporate debt with an installment schedule, you limit or remove the risk of fines or interest.

Endnote

There is no reason to panic if you receive an unexpectedly large tax bill. The methods above will help you navigate the situation. Whatever the situation, never fail to file returns.