If you own a business in the United States, you already know that the Internal Revenue Service (IRS) requires firms to pay their tax bills annually. The truth is that tax payments are one of the only constant things in life. After years (or decades, even) of compliance, chances are you’re well-acquainted with the business tax process.
However, if there are any wrinkles to your revenue and overall financial situation, the tax process changes. If you are in a tight situation where this year’s debt is more than you can handle, you may not have the funds to pay your business taxes.
Fortunately, there is one particular solution that you can pursue as a means for tax compliance without having to put liens on assets or garnishments put on paychecks: an IRS Installment Agreement.
What can you do to get by when it comes to business taxes?
Ever since the COVID-19 pandemic hit and forced losses in nearly all businesses all over America, more firms have found themselves unable to pay their tax bills.
With debt pooling atop firms and backing them into tight corners, the IRS has emphasized the opportunity to seek assistance by setting up an installment agreement. Over the past few months, industry experts have urged businesses to pursue this particular course of action in case they are unable to pay their taxes at once. An installment agreement provides an opportunity for companies to settle tax payments with ease.
Going over the process
Although it may seem quite complicated at first, the process of setting up an installment agreement with the IRS is relatively straightforward when you know what to expect.
For companies that owe less than $50,000
Generally, the type of installment agreement you end up pursuing should reflect how much you owe authorities based on your computations. If you owe less than $50,000 (including the actual debt itself with fees and penalties), you can ask for a simple plan that lets you make payments based on your total income.
After determining how much you owe, the first step you need to take is to fill out IRS Form 9465—a document form that can be found here. It’s best to enlist the services of an expert like Axiom Tax Resolution Group to navigate these steps for a much smoother process.
When it comes to settling the installment agreement, you can settle your dues through various methods. The IRS accepts payments in the form of:
- Money orders
- Personal checks
- Credit cards
- Debit cards
- Automatic bank withdraws
Compared to standard loans and other common forms of financial assistance, IRS installment agreements are indefinite as payers will continue paying the debt until your account is settled in full. Conversely, balances can be resolved when one reaches the ten-year time limit at which the IRS can legally collect the remaining amount owed.
For companies that owe more than $50,000
For businesses that owe more than $50,000 in taxes, qualifying firms will be legally obligated to disclose income and assets at their disposal. If you find yourself in such a situation, it’s important to note that you must inform the IRS about any of these assets that you may have under your name before you can set up a payment arrangement:
- real estate
- lines of credit
- bank accounts
In most cases, such assets could be liquidated as a means to settle whatever amount you owe the government in tax payments. By the time authorities determine what assets can be sold, you’ll be allowed to make payments on your debt after the liquidated values are applied!
In times like these, paying business taxes to the IRS can be difficult because of operational slowdowns, extended losses, and the difficulty of bouncing back. Thankfully, even if your business is in the red, there are still viable options for you. You can use IRS installment agreements to easily fulfill your tax obligations!
Axiom Tax Resolution group provides tax resolution services for businesses all across Birmingham, AL. Get in touch with our experts today!