Struggling With Tax Debt? Here’s What You Can Do

Tax debt is totally manageable with the right people in your corner. When you’re ready to discuss your options, rely on Collins Legal for help.

C- and S-level businesses must pay taxes every three months, on a quarterly basis. But what can you do if you’ve missed a payment or two? How can you resolve tax debt owed to the IRS?

To avoid penalties, excessive tax debt, or additional tax problems, read this quick guide on business tax help.

File your taxes, even if you can’t pay them

If you find that you have a tax debt balance after crunching the numbers, you should still file your taxes. Ignoring them until you have more money will only make your situation worse. Failing to file by the deadline could result in a monthly penalty of 5% of your existing tax debt with up to a maximum amount of 25% of your balance. Obviously, this would be a significant load on top of an already-significant debt.

If you really need more time to file your taxes, you might have the option to file for an extension. Either way, you should pay as much of your estimated taxes as you can by the annual deadline in April. This is the only way to avoid interest and penalties from accruing.

Request a payment plan, delay payment, or settle

Fortunately, the IRS offers workable options in case you can’t pay back your full balance within 120 days.

If you need more than 120 days to pay back your tax debt, your best option is to request a payment plan. Also known as an installment agreement, this allows you to pay back your debt over time as long as you owe less than $50,000 in back taxes. However, penalties and interest may apply.

Your second option is to simply delay payment with the IRS. If you can prove to the IRS that paying back the debt right away would prevent you from affording basic living expenses, they will let you put the payment off for a specified amount of time. However, your debt will continue to accrue interest and penalties while you’re waiting to pay it off.

Finally, you may have the option to settle for less than you actually owe. This option is available to people who can prove that paying the debt back would cause significant financial hardship. This is perhaps the best form of tax relief for those with a seemingly unmanageable tax burden.

Hire a tax professional for help

Tax debt can be complicated. To lighten the load and help you figure out, it’s highly advisable that you reach out to a reputable tax consultant. A financial coach, public accountant, or tax professional can help you get your taxes in order without missing any important details that you could be penalized for. For business professionals with relatively little experience in the realm of taxes, relying on tax help is the only sure way to get your tax debt situated.

Debt can seem like a dark tunnel with no light on the other side, but with the right assistance, there’s always hope. Hopefully, this article has helped you see that tax debt is totally manageable. When you’re ready to discuss your options, rely on Collins Legal for help.

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