Don’t panic. You have options. What To Do When You Realize You Can’t Pay Your Business Taxes First, don’t panic. This happens to many business owners. Second, be sure to file on time, even if you can’t afford to pay in full at that time. Next, review your options. Understand that no matter how you proceed, your debt will accrue interest until you pay the IRS in full. And the IRS will not waive interest charges. Double-check your books to see if you can pay the IRS in full before moving forward with payment options. Then, be sure to respond to the IRS’s notice within 30 days of receiving it. This means collecting all of your business’s financial information, including pay stubs, rental or lease agreements, mortgage statements, lease and loan documents, and utilities documents. Call the IRS at 800-829-4933 for assistance. The IRS can help you determine the best payment option for you based on your current circumstances. You Have 4 Options if You Can’t Pay Your Business Taxes On Time Full Payment Agreement Installment Agreement Offer in Compromise or Partial Payment Installment Agreement Temporarily Delay Collection A Full Payment Agreement provides you with additional time to pay your business taxes in full. The timeframe is up to 120 days. An Installment Agreement is a monthly payment plan. You can discuss your needs with the IRS about payment options and set up a payment plan with them. A monthly payment plan may work well with your monthly budget if you cannot pay in full within 120 days. An Offer in Compromise is when you and the IRS create an agreement that determines a reduced payment amount to resolve your tax liability. You are essentially compromising on the debt amount. The IRS will only consider an Offer in Compromise if you are up-to-date on all tax filing and all other tax payments, including quarterly taxes. A Partial Payment Installment Agreement lies somewhere between an Installment Agreement and an …
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