Sacramento + Roseville Accountant for Corporate Back Taxes Owed
Our Sacramento and Roseville corporate back tax accountants at Cook CPA Group can help you file unpaid taxes owed by your corporation. Call today.
Successfully maintaining a business requires a great deal of time, effort, and dedication. Amid the shuffle, promptly and accurately preparing taxes can be something of a challenge, but failing to pay taxes on time can result in a business owing back taxes. If these taxes go unpaid for too long, businesses can face severe consequences that affect their long-term health. If you have a business that owes back taxes and you need assistance filing them, you should get in touch with the Sacramento and Roseville corporate back tax accountants that work with Cook CPA Group.
Understanding Back TaxesBack taxes are taxes that are owed from a prior year for which you filed a tax return. They may be unpaid because you did not have the money to pay the taxes, faced hardships that left you unable to pay them, or simply did not want to. Back taxes can arise when a taxpayer filed a return but did not pay all of the taxes that were due, failed to report all of their income on their original tax return, or failed to file a tax return altogether. When taxes go unpaid, the IRS will send notices to the taxpayer. If they continue to fail to pay what they owe, the IRS will add a penalty to the amount due, and an interest of 0.5% will be added every month that the tax goes unpaid. It is most advantageous for businesses to pay taxes as soon as they are due to avoid penalties and interest.
Possible Penalties for Unpaid Back TaxesThe IRS prefers that taxpayers pay taxes as soon as they are due. If taxes are not paid at that time, the IRS can and will impose penalties on taxpayers as both punishment and incentive. The following are possible penalties for failure to pay taxes:
- Tax lien – If enough time passes without receiving a payment, the IRS may place a lien on your property. By issuing a tax lien, the IRS lets your other creditors know that their debt takes precedence over all other debts. If the lien is in place for long enough, the IRS may eventually seize assets associated with your business. A lien may also damage your ability to take out loans, or it may increase the interest on loans you already have.
- Refund withheld – If you owe back taxes, the IRS may keep refunds that are owed to you in the future.
- Imprisonment – One of the most severe consequences of failing to pay your taxes on time is incarceration. If you ignore all of the notices that the IRS sends to you and blatantly evade the responsibility you have to pay your taxes, you may end up being arrested for tax evasion.
- Loss of passport – If your business owes more than $52,000 in back taxes and you are not involved in an installment agreement or offer in compromise, your passport may be revoked.
- Fines – Penalties and fees are possible consequences of failing to pay back taxes.
Ways to Address Corporate Back TaxesIf your business owes tax payments and you are unable to pay the full amount at once, there are steps you can take to minimize penalties in the long run. Things Sacramento and Roseville accountants can do to properly deal with back taxes include:
- Replying to notices – If the IRS sends notices and you fail to respond, they are more likely to impose harsh penalties.
- Entering into a payment agreement – If you do not have the money necessary to pay your back taxes in full, you can arrange a payment plan with the IRS. You and the IRS can agree on the amount that you will pay each month and the length of time that it will take for you to pay back the taxes you owe. An offer in compromise might also be an option for you; with an offer in compromise, you and the IRS settle on a tax bill that is less than what you owe if you can demonstrate your inability to pay and agree on a plan for paying the new amount.
- Gaining CNC status – If you are suffering from economic hardship and lack the income to pay both your tax obligation and your daily living expenses, you can request that the IRS put your account into “currently not collectible” status. When you have this status, you will still owe back taxes and will continue to accrue penalties and interest, but the IRS will cease collection efforts until you are able to pay.
- Filing for an extension – If your business faces back taxes because you simply haven’t filed your return yet, filing for an extension may be helpful. Having a few more months to file your taxes will not reduce the total amount that you have to pay, but it will afford you some more time to gather the necessary information for your return.
- Filing for bankruptcy – This can have serious consequences for your business’s financial health and should be treated as a last resort, though it may be the best option in some cases.