Being knowledgeable about business taxes is fundamental to running a successful business. From small business to multinational concern, tax laws can deliver benefits or bad news. If your business is assessed a tax penalty—it is a good idea to know what to do next.
The Internal Revenue Service (IRS) is upfront when you have been tagged with a penalty. Maybe you did not pay your taxes in full, the payment was late, or the assessment is a result of an earlier IRS audit. You will receive a collection notice detailing the payment, penalties, and interest due. As we have mentioned earlier, interest on unpaid tax balances compounds daily, so do not ignore the notice.
You can quickly review your online IRS account to get more information. Carefully consider whether the assessment and penalty are valid. If the assessment is valid, your best next step may be evaluating how to pay the tax liability and the penalty to avoid additional financial pain. If you do not have the cash on hand, consider a bank loan or a credit card—both are likely less costly options than continuing to grow the debt with the IRS.
One way or the other—respond to the IRS. If you do not respond, the agency is required to send a final notice of intent to levy and inform you of your right to a Collection Due Process (CDP) hearing. The IRS can pursue collection actions including a trust fund recovery penalty if you have outstanding unpaid employment taxes.
Importantly, if the assessment is due to an earlier audit of you or your business, you have the right to request an audit reconsideration unless you have already agreed to pay the audit assessment, or received a final determination of your tax debt. Generally, you may qualify for an audit reconsideration if you have new information to present, you never received the original audit report, or you disagree with the assessment result of the audit.
As with any disagreement involving a significant sum of money, speaking with an experienced tax attorney who is familiar with IRS collection and tax litigation can be crucial. Your tax attorney can help you understand strategies, your ultimate exposure, and assist you with the audit reconsiderations or appealing a collections action by the IRS. Bottom line—if you receive an assessment or collection notice from the IRS, touch base with your tax lawyer for advice.
Our tax lawyers can help when you are facing tax litigation or a large tax liability
Whether you receive a collection notice or notice of an upcoming IRS audit, our tax group delivers aggressive, knowledgeable tax defense against allegations by the IRS, tax litigation, or tax controversy. When you have tax questions, call 440-250-9709 or contact us online today. We have offices in Cleveland and Chicago serving domestic and international clients.
