Common Tax Challenges for Small Business Ownerss
Small Business Ownerss often face specific tax situations that can lead to IRS liens and collection actions. Understanding these challenges is the first step toward resolution.
Resolution Options Available
Regardless of your specific situation, several IRS programs may help resolve your tax debt.
- Installment Agreement - Monthly payments you can afford
- Offer in Compromise - Settle for less than the full amount
- Penalty Abatement - Remove penalties for reasonable cause
- Currently Not Collectible - Pause collections during hardship
Frequently Asked Questions
Closing your business doesn't eliminate tax debt. You remain personally liable for trust fund taxes (payroll), and sole proprietors remain liable for all business taxes. The IRS will pursue collection personally.
Trust fund taxes are the employee portion of payroll taxes that were withheld from paychecks. The IRS considers these held 'in trust' and can assess personal liability on responsible individuals. Other business taxes don't automatically create personal liability (depending on entity type).
Yes, but it's complex. The IRS evaluates the business's ability to pay, assets, and future income. If the business is closed, personal liability may be addressed through a personal OIC.