You may worry that because you cannot pay your full tax debt, you have no recourse. However, you cannot put off dealing with the matter. The IRS may resort to tax liens, levies and garnishments that lead to the closure of your business.
Options for relief are available, though, and one of these may be the solution to your situation.
Installment agreements
You can request a payment plan, and if the IRS approves it, you can take care of the entire amount through monthly payments. Short-term plans involve paying the full amount within 120 days, and these do not result in a user fee, although a fee applies if you pay using a debit or credit card.
The IRS adds interest and penalties in addition to setup and user fees, so the longer it takes to pay the debt, the more you will owe.
Offers in compromise
Perhaps the amount you owe is beyond your ability to pay. In this case, the IRS may accept an offer in compromise. The agency evaluates your circumstances, including your income and expenses and the equity of your assets, and may allow you to pay a lesser amount.
The IRS will only accept an application after you have completed all your tax return filings. An application fee and initial payment must accompany your submission. Any agreement the agency approves will include a figure that you should be able to pay within a reasonable time.
Bankruptcy
If your situation is dire, and especially if you have other debt affecting your business, you may want to consider bankruptcy. By filing Chapter 11, you reorganize your debts into a manageable payment plan. Some tax debt is dischargeable, so this may provide the relief you need.
