It’s rather common for small businesses to face the daunting power of the Internal Revenue Services (IRS) if it’s behind on tax debts. Worst of all would be the various methods that the IRS can use to collect these taxes from the small businesses, most of which would spell doom for them. However, the good news remains that most small businesses which have tax debt can actually deal with the IRS, provided they’re aware of the ins and outs of dealing with this collection ordeal.
Strategies to Follow When Dealing With the IRS
If you’re the owner of a small business and happen to be behind on taxes while wanting to stay in business, then here are a few strategies that you can adopt.
1. Keep in Touch With the IRS
This is one of the crucial things that you can do. Even if the agency leaves you alone for a while, you might as well be completely assured of the fact that they’re going to come back soon and that too at the most inopportune time possible. Now, it’s definitely not a good idea to ignore the IRS, so it’s best if you informed them about your difficulties.
2. Give Them Financial Information
The best thing would be for you to cooperate and provide the necessary financial information to the IRS. However, make sure that you provide only what the IRS asks for, and don’t go for a full disclosure. At the same time you should make it a point to not lie to the IRS, whereas you aren’t legally required to disclose anything to them unless formally summoned.
3. Use the Time That’s on Your Side
In general, the IRS collection machine happens to be a rather slow one to get started with. Also, it’s slow to react when things start rolling. This is important for this gives you crucial time necessary for strategizing. However, make sure that you use this time right to plan your course of action if you’re really interested in saving your business.
4. Do Get an Offer in Compromise
You could definitely try to get an Offer in Compromise for almost about one in four businesses generally get that done. Now, requesting an Offer in Compromise happens to be a rather lengthy and formal process altogether. Here you’ve got to fill out an IRS form and provide detailed information about your business’ precarious financial condition. You should also request that the IRS accepts only a portion of what your business owes.
5. Do Request for “Uncollectible” Status
Now, if it so happens that your business’ financial situation is absolutely dire, then you can go ahead and request to be temporarily placed on the “Uncollectible” status. If you get the IRS to agree on this, then they’re going to leave you alone for some time. However, don’t forget that you still owe tax as well as the penalties and interests that’ll accumulate.
Try following the strategies discussed above and then you should be able to counter the IRS and save your small business in the process as well.