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Every profitable business in the United States pays taxes to the government. To help taxpayers understand and meet their obligations, the Internal Revenue Service (IRS) provides instructional, compliance and enforcement services. As a financial professional, you want to ensure that your company is tax compliant. Sometimes, small businesses as well as major corporations do not comply with the tax laws. In these cases, the IRS will enforce the law on these entities like dental practices to pay their fair share of tax. However, the tax penalties and debt can hinder a company’s ability to operate. In these situations, you can get help from the IRS fresh start initiative.
What Is The IRS Fresh Start Program?
While most people think of the IRS fresh start as a program, it is actually a set of guidelines. These guidelines are in place to help you negotiate you tax debt. By doing your tax research carefully, you will find many options. In fact, you will probably be eligible for several advantages the fresh start initiative offers. Of course, the guidelines identify procedures to lower your tax debt or current payments. For a struggling business, you can provide the much needed cash flow. By utilizing all the programs your business qualifies for, the program proves it’s effectiveness.
Streamline Tax Payments
The IRS fresh start allows your company to pay taxes in installments. For individuals and small businesses, it raises the limits of debt eligible to participate. For example, small businesses can make streamlined installment agreements for balances up to $25,000 in liabilities. Rather than paying $10,000 in back taxes, your company can pay it over the course of 24 months or less. Certainly, the ability to pay with installment plans for tax gives your company great financial flexibility.
Penalty Relief
Next, your small business may qualify for penalty relief. Under the fresh start IRS program, the business owner could receive more time to pay their taxes. They would avoid the failure-to-pay penalty. To qualify, the owner must have less than $100,000 of self employed income (single filing). On top of that, the company must have experienced a minimum 25% reduction in revenues. If you were to bring this to your company owner’s attention, they would be grateful for the information. It might help contribute to more funds in the business, your salary or a bonus check at the end of the year.
Offer In Compromise
To take advantage of a fresh start with the IRS, assess your company’s ability to pay tax debts. Then, present your income and expenses in association with the company assets. Based on this information, the company can send the IRS an offer in compromise. The offer will create a debt settlement offer for the IRS. If they choose to accept a fair offer, it would result in a sizable IRS tax debt forgiveness amount. A reasonable debt forgiveness could result in thousands of dollars saved in business expenses. Therefore, be sure to use this option carefully to get a fresh IRS start.
Remove A Tax Lien
As you might know, a tax lien by the IRS is a major hit to the business credit score. In the fresh start program, your company can request to have a tax lien removed. Using IRS Form 12277 Application for Withdrawal of Filed Form 668 (Y) Notice of Federal Tax Lien, the company can clean up it’s credit report. Once the tax debt is paid or meeting the installment agreement criteria, then your tax lien can be removed a lot sooner than the standard 7 year period. The improved credit report could help your finance department secure bad credit loans, alternative funding or working capital.
The Initiative Helps Business
Especially for struggling companies, the Fresh Start Initiative will reduce tax liabilities. Take the time to utilize these methods, among several others, to save your company tax expenses. If eligible for these tax debt reduction programs, the financial situation of the company can improve significantly. You won’t have to wait to find out what is probate to settle your tax debt. In addition, you will be doing an outstanding job to get the company’s tax debt under control as soon as possible, leading to a more profitable enterprise.
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