Owning a business comes with many responsibilities, including financial ones. Texas business owners might find themselves overextended with loans or other debts, and limited or decreased cash flow could undermine the ability to make payments. Some may choose to cover certain debts while pushing other obligations off. Sometimes, that results in a business and its owner owing significant sums of back taxes.
Business owners face mounting tax debt
Business owners must file personal and company-related tax documents by the due date. Anyone unable to file by April 15 could file an extension, eliminating the failure to file penalty. Still, interest and failure to pay penalties accrue.
A common error in judgment business owners make is that they allow returns to go unfilled for several years. Not filing tax returns could result in problems worse than financial penalties or increased risks of audits. Negligent or willful refusal to file tax returns may lead to a criminal investigation and possible charges.
Addressing matters related to back taxes
Perhaps business owners who have not filed tax returns should take steps to submit delinquent returns without delay. Those unable to pay could explore options to make their payments on balances due. The IRS has policies to assist those struggling with past due or substantial tax debt.
An installment agreement allows taxpayers to address their debts with monthly payments over time. Interest and penalties accrue, but collection action ceases. That is one option available. An offer in compromise is another. An OIC provides a way for a taxpayer to settle taxes owed when the person is in a difficult position and unable to pay.
Such arrangements require the taxpayer to follow a designated process. Errors and omissions could lead to delays and rejections of installment agreements or offer in compromise requests.