What are my Options to Repay Unpaid Sales Tax Debt?



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Unpaid taxes are potentially dangerous to the individual or company. It is imperative that one of several options is taken to ensure this tax debt has been paid, or the person or business could face severe consequences from the Internal Revenue Service.

Unpaid sales tax is often an issue that a company deals with when customers have paid this but the business has not transferred the funds to the appropriate party. There are some consequences that the organization may face if these debts are not resolved. However, in order to ensure the taxes have been paid, there are options available that may be taken to reduce or eliminate the debts accrued. Sales taxes are first paid by customers or clients and then transferred to local or state collection agencies as necessary. When this process is disrupted, the business owner may be liable for repayment or additional damages such as fines and extra fees.

When the business is responsible for unpaid sales tax, it is possible to acquire a company credit card and payout the entire amount immediately to avoid other fees and expenses incurred by late payment. This option is possible when there is a credit card that may be acquired by the company. Others choose a type of payment plan through carefully communicating the issue of no actual funds when the local or state tax agencies requires the monies. Another option could be open when swift transfers are not possible. It may be necessary to hire a tax lawyer to determine what other routes could be taken.

Refinancing Option

For an individual, he or she may be able to refinance a home. Businesses may have similar options. By refinancing a loan, a building or a property, the business owner is able to replace one type of debt with another. This may be a temporary solution, but it does buy the company time to pay off all debts. When there is enough revenue flowing through the company, it may only be a matter of paying off sales taxes to reduce or eliminate additional fees or penalties. Then, the refinancing loan may be removed when the owner has time to pay this off. This could also be accomplished through a mortgage of any real estate owned by the company.

Installments Paid to the IRS

When sales taxes are past due, the company should seek to make a deal to ensure no further penalties or criminal charges are pursued. This may lead to an installment agreement. However, this is only accomplished through communication. The business owner must contact the local or state tax authorities to work out some arrangement. There is an option to seek online processes if the business owes $50,000 in taxes and penalties or less. However, if the amount is greater, then an agent must be contacted. Options of direct debit and online payments could decrease the fees associated with the installment agreement.

Offer in Compromise

For struggling businesses, it may be possible for the IRS to consider accepting less than the entire amount of what is owed by an Offer in Compromise. There are several factors that may lead to this option such as the ability to repay what is needed, the income acquired by the company, the expenses of the business owner and any assets or equity that the organization possesses. This option is usually only considered acceptable if the repayment cannot be provided within a certain amount of time. It is important to research this path fully before considering it, and it may be the last resort, or it may be one of the last reasonable choices.

Last Resort Options

If the sales taxes cannot be paid, and no other options are available, the business owner may consider insolvency. It is vital that the individual contacts the IRS for these issues, and communication about his or her situations is crucial. Without contacting an official, additional penalties, punishments and fees could be added to the current amount owed. There are tools online to assist in understanding what is owed, how to access online options and who to contact specifically. The information is available to those that are looking to resolve the issue.

The Tax Lawyer

If no options appear beneficial, it is important to contact a tax lawyer for a free consultation of the situation. He or she may discover the best route to take and how to resolve the matter with a minimum of expense and penalties.


Provided by HG.org

Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.
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