Business owners struggling with debt may be more concerned with keeping their business afloat than paying all of their creditors. This may even be the case if the IRS is one of the creditors demanding payment. Indeed, the IRS’ power to collect taxes is legendary, but business owners may not realize this until the IRS closes their doors.
Because of this, business owners should know how the IRS collection process works, as well as the warning signs that a business in danger. This post will highlight a few.
The initial bill is sent –The IRS will commonly send communications detailing how much is owed, when payment is due and will describe when penalties and interest will begin to attach for non-payment. As we alluded to earlier, most business owners will ignore this notice; but they shouldn’t.
Application for seizure order – If the traditional collection methods are unsuccessful, the IRS may file a motion in U.S. District Court seeking permission to seize the business. If the court grants the motion, IRS agents will be allowed to place locks on the premises and post notices indicating that the property has been seized. The IRS will then arrange to have the business and its assets sold to pay off the tax debt.
Indeed, the seizure of a business is an extreme measure, but business owners can avoid this scenario, even with extraordinarily large tax debts. An experienced tax law attorney can help in negotiating a repayment plan or even an offer in compromise.
The preceding is not legal advice.