If your business has been hit with a huge tax bill, take a deep breath. Even though you might be panicking on the inside, you have options. For federal taxes, the IRS is all too happy to let you make installment payments. Doing so ensures that they eventually collect all of the money owed to them, even if it takes a while.
The same is true for state taxes. While every state is different, they all want the same thing—funding. So, they’ll more than likely work with you to come up with a payment plan that allows you to pay off your tax debt over time.
FEDERAL TAX INSTALLMENT OPTIONS
Times are tough, and the government has figured out that not everyone has the means to pay the taxes they owe as small businesses or individuals. That’s where the IRS Fresh Start Program comes in.
The IRS Fresh Start Program exists to help business owners and individual taxpayers make their tax payments and stay in good standing with the IRS. If the IRS does not think that you can pay your liability through a payment agreement, then you might qualify for an Offer in Compromise (OIC). An OIC is an agreement that the taxpayer and IRS make that allows the taxpayer to settle their liabilities for less than the total amount they owe.
The IRS won’t accept just anyone for an OIC. They’ll review your assets and income to determine whether you can realistically make your full payment. Once accepted for an OIC, the taxpayer needs to complete their payment plan within 24 months.
If you don’t qualify for an OIC, you can still make installment payments. One thing to know is that there is a fee to set up an installment agreement with the IRS. You can set it up on their website, or you can work with a tax legal team who will do all the work for you and make sure that you have an installment agreement that works with your financial constraints.
STATE TAX INSTALLMENT OPTIONS
State tax laws vary, but, in general, they have the same mentality as the federal government when it comes to collecting taxes. If you can’t pay your state taxes for your business, then contacting the state department is the best way to determine your payment options.
More often than not, the state will be happy to put you on a payment plan that lets you make smaller payments every month instead of committing to one lump sum at tax time. However, many states tax agencies are often even more difficult than the IRS to work with. The Illinois Department of Revenue, for example, is one of those state agencies.
DO I NEED A LAWYER TO SETTLE MY TAXES?
If you feel overwhelmed by your tax situation at either the state or federal level, consulting with a legal tax expert can bring clarity to the situation and ensure that you don’t pay any more fees or taxes than you need to. We would be happy to talk to you about your specific situation and run through your options so that you can pay your taxes.
Contact us today for a free consultation!