Tax-Related Issues Businesses May Face in Coming Months (or Weeks)

The COVID-19 pandemic, stay-at-home orders, and subsequent economic downturn has so many small businesses holding on for dear life. Unfortunately, many have already shuttered. While our firm’s focus is on helping individuals and companies resolve tax-related issues with the IRS, we want to keep entrepreneurs aware of some issues they may face in the near future. We have outlined some potential problems below.

Generic Payroll Tax Mistakes

With everything going on right now, it’s easy for some (important) things to fall through the cracks. For those of you who are business owners you still need to remember to stay up-to-date on everything related to payroll taxes. Don’t forget to withhold the proper amount from your employees’ paychecks, deposit these amounts on the 15th of each month, and send Form 1099s to any independent contractors to whom you paid $600 or more in a calendar year. Holding onto all records related to employee compensation is also a must if you want to avoid getting in trouble with the IRS.

What if Your Business Cannot Pay its Tax Obligations?

Chances are, your company was humming along before the pandemic hit and devastated its finances. Because of this, you may not be able to pay the IRS all of your tax liabilities. There have been certain relief programs that were passed by Congress in response to COVID-19, but many have been plagued with problems. There are no guarantees that they can help you, so it is worthwhile to review your existing options when it comes to paying your business’s tax debts.

  • Offer-in-Compromise: Pursuing this option means that you are hoping to pay back the IRS less than what you ultimately owe. This is an option for taxpayers in dire financial straits who simply cannot satisfy their obligations to the IRS. You will have to submit documents that show your business’s current revenue and ability pay. If you would like more information about settling with the IRS for less than you currently owe, get my free IRS Offers-In-Compromise Guide.
  • Installment Agreement: This option is largely what the title suggests: recurring payments to the IRS instead of one lump sum. Be sure to make all payments properly and on time.
  • Ask for an Uncollectible Status: This option is often considered a last resort for businesses that cannot pay their taxes. While your company is not paying anything, penalties and interest will still accrue. However, you will still technically be in compliance during this delay and the IRS will be unable to collect the taxes once the collection statute expires (generally about 10 years).

Conclusion

We understand the difficulties of being a small business owner during these uncertain and strange times. The IRS is not usually as understanding though. So you need the help of a tax professional if you are worried about not being in compliance with this federal agency. Get in touch with our firm at 206-207-0417 to receive a free consultation today.

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