When small business owners fail to pay their taxes
Owning a small business is not for the faint of heart. At times, it can be a challenging, financially unstable experience. If your business is struggling and you’re faced with competing bills, it could be tempting to pay off your suppliers ahead of the IRS in order to keep your company afloat. However, postponing payment of your taxes can lead to more devastating consequences than you may realize.
When you fail to pay your taxes on time, the IRS sends you a Notice and Demand for Payment. If you receive this bill in the mail, consider it your final warning before you face any serious penalties. If you pay this bill by the deadline shown, you’re off the hook.
However, if you are unable to make this payment by this deadline given, then the IRS takes things a step further. It issues a Notice of Federal Tax Lien, which is essentially the federal government’s claim to all of your property. This lien attaches to everything you own: your home, your car, your securities and—yes—your business too. Over time, continued failure to pay your taxes could result in the IRS taking this property from you.
To make matters worse, when you have a tax lien, this information is made public. Creditors are notified, which negatively impacts your credit score. For a struggling small business owner, a tax lien can hinder your ability to secure a loan or sell your business.
If you’re a small business owner, settling a tax lien quickly could make or break the future of your company. Talking with a lawyer could help you to understand your options if you’re in a bind.