Posted On October 10, 2018
What a Tax Lien Could Mean for Your Small Business

What a Tax Lien Could Mean for Your Small Business

Nevada business owners that fail to pay their taxes could receive tax liens that put business and personal assets at risks. The Internal Revenue Service can issue a notice of a federal tax lien when a business or individual taxpayer fails to pay their taxes in full and on time. When a lien is issued, it gives notice to other creditors that the IRS has a priority claim to the property and assets. The IRS can also decide to sell off the assets to recoup the taxes that are owed. There are a few ways for business owners to take care of tax liens so that they can avoid the risks.

Understanding Tax Liens

Notices of federal tax liens are public documents that inform creditors of the IRS’s priority interest in a business’s property. The IRS can also enforce its lien by auctioning off the business property and other assets. However, the IRS often does not do this because of the hassles involved. If a business is set up as a sole proprietorship or a partnership, the IRS can also go after the personal assets of the owners or partners, including their cars, homes, vacation properties, and others.

What to Do About Business Tax Liens

The best thing that small business owners can do is to make certain to pay their business taxes when they are due. In the event that unforeseen circumstances make that difficult and a tax lien is issued, there are a few things that business owners can do to get rid of the lien. A business might be able to get the IRS to agree to release a lien against a specific piece of property. This might allow the business to get a loan to make it easier for the tax debt to be repaid. The IRS might also agree to subordination, which makes the IRS’s priority less than that of other creditors so that the business can access funds to repay the tax debt. Business owners might also be able to negotiate a withdrawal of the tax lien. If the business owes less than $25,000 and enters into an installment agreement, the IRS might agree to do this. A lien might also be withdrawn if the IRS did not file it in the correct manner. While difficult, it is not impossible to have the lien released if the debt is resolved by a settlement. An experienced specialist at the Randolph Law Firm can help you navigate the best option for your business in handling the lien.