While the economy stays at a stand still and is causing businesses to slow down, especially small businesses, it would not be a surprise to see business owners wanting to negotiate with the IRS for back liabilities owed. Even selling the business at this time would probably not break even to settle it. That would be a good reason to get business tax debt help from a professional tax attorney.
When taxpayers find themselves in this situation, regardless of whether or not they own a small business, filing bankruptcy can be a reason to ask for some relief. Business owners would be required to produce the latest income and financial statements that prove their business is in turmoil. Meaning that at this time their ability to settle the debt is zero. The IRS would take this into consideration and may allow a debt relief.
The business owner may want to settle on a reduced amount which is known as an Offer in Compromise. This can help to decrease abatement of tax penalties, but the taxpayer would still be responsible to pay the full amount in scheduled payments. Another alternative would be to liquidate and totally wipe out any liabilities owed if the business warrants it.
If the taxpayer has owed back liabilities for three years, tax codes stipulate those debts must be paid in full. Any other tax debt owed thereafter would be subject to tax relief proceedings. That’s why it is important to get help from an IRS tax relief attorney.
However, filing bankruptcy to get a tax relief will not alleviate paying local taxes. This is because local tax debt cannot be used against declaration of bankruptcy. That must be settled in full before debts on federal business income tax can come to a settlement.
The IRS is famous for making business owners comply settlement with local tax codes before tax relief is granted. Simply put, do not count on bankruptcy alone as a means to get out of paying taxes. You must settle non-negotiable taxes first. Seek the advice of a tax relief attorney to get business tax debt help before filing bankruptcy to solve the problem.
Your tax debt attorney will help to provide the correct document showing proof of your incapacity to pay. They will present that proof during the proceedings. Even though the IRS really wants to collect on those liabilities, they wouldn’t turn their heads on allowing some kind of tax relief.