Tax Relief Program Types That Every Business Owner Must Know About
Tax relief for SMB's is in high demand more than ever due to the pandemic that literally steamrolled the economy for around a year. The IRS provides various programs for businesses struggling to pay their taxes on time. They have minimized several bureaucratic procedures to make the process easy and quick for the SMB's and prevent seizure due to non-payment of taxes.
IRS Installment Agreement
IRS installment agreements like the Direct Debit Installment agreement come in handy to many small businesses. The automatic payment deductions eliminate late fees, and the installment procedure enables the business owners to pay in easy EMI's.
When this agreement is valid, there will be no enforced tax collection or action like levy or tax lien. A competent tax attorney will help you create such agreement requests highlighting your business issues.
Small business owners struggling with low profits can apply for the installment with the help of expert tax attorneys referred by Taxfortress.com. They will guide you to use the most suitable tax relief programs to help you eliminate the IRS tension.
The Partial Payment Installment Agreement
The Partial Payment Installation Agreement allows a person to repay the taxes in small payments with extremely small monthly EMI's. The IRS requires various disclosures and closely monitors the business owner's financial situation to determine whether they are eligible for the scheme.
The SMB owner can pay a particular amount of tax and pay the remaining in monthly installments within the next ten years. It is very beneficial to them as they can use the extra money to get back on their feet and improve the business. They can reassess the agreement and pay the tax in full if the company is running well within a few years after the deal. Offer in Compromise
Offer in Compromise or OIC allows the business owners to negotiate and settle on the tax amount to get paid. The business owners need not pay the total amount to the IRS. They can list the reasons they cannot pay the tax in full due to business losses, natural calamity losses, depreciation of assets, etc.
The IRS will give them a chance to pay a lesser amount than they owe the state. There are three categories in the OIC a) doubt as to liability, b) doubt as to collectibility, and c) effective tax administration. The doubt as to collectability is the most common form of OIC applicable to SMB's.
Currently Not Collectible
The Currently Not Collectible or CNC requires the SMB's to prove they cannot pay even the monthly installment for taxes. SMB's struggling to maintain their business with high credits often choose this option. It damages their credit score and reduces their ability to get more recognition from banks and other small business grants.
CNC also gives temporary relief from paying any tax to the IRS for a certain period. The IRS does regular reviews on the business's financial situation and determines whether to extend the CNC period or change the scheme to partial installment over time.
Tax penalty abatement
IRS tax reduction does not affect the credit score and kindles the SMB's to pay their tax on time regularly. Penalty waivers can get claimed if a statutory exception occurs, in case of an administrative waiver, an IRS error, or simply a reasonable cause like a business loss.
IRS does not levy any significant fine for them in the form of penalties if they are regular in declaring and paying their taxes on time. They even eliminate various penalties if the tax is paid in time and voluntarily by the SMB's.
The SMB's can get a refund for the standard form of IRS penalties like late tax filing fees or non-payment fees if they give a reasonable cause for the delay.