Terri recently sat down with Suzanne Kearns of Intuit Quickbooks to discuss what options small-business owners have available to them when they find themselves behind in their taxes owed to the IRS. Here are some highlights from Terri’s interview:
Small Business Center: What are some of the reasons that small-business owners fall behind in their taxes owed to the IRS?
Terri Brunsdon: One example is that a business suffers an economic slump and, instead of paying taxes, it pays vendors. The biggest issue I encounter is a business’s failure to remit payroll tax withholdings. Because payroll withholdings are fiduciary taxes (meaning it has been collected from employees on behalf of the IRS), the IRS will hold the business owners, accountant, and any other responsible parties personally liable for the tax.
What power does the IRS have over business owners to force them to pay overdue taxes?
If a business fails to pay its taxes, the IRS can levy and lien its assets. To levy means the IRS seizes financial assets, usually cash in bank accounts or payments from customers. On the other hand, a lien is public notice that the IRS has a priority claim on the business’s assets that must be satisfied before they may be sold. A lien also affects the credit rating of the business. If the unpaid tax is fiduciary, the IRS can levy or lien the assets of the owners and any other responsible party.
To learn more about Terri’s advice to small-business owners, read the full interview from Intuit Quickbooks.Disclaimer: This is intended to provide useful tips and is NOT intended to be legal advice. You should always seek the advice of an attorney when creating a will. You can also get more information about creating a will by contacting one of the attorneys at Brunsdon Law Firm.