What happens if you miss a tax deadline? How long does it take before the IRS begins its collection action to collect your tax balance? How many fees will you have to pay?

Understanding and managing the nuances of tax law isn’t easy.

Understanding and managing the nuances of tax law isn’t easy. Whether you have failed to file your tax return on time, could not make a payment on time, or you are were assessed penalties by IRS, the best thing you can do is seek the assistance of skilled tax attorney.

The team at Milikowsky Tax Law has years of experience navigating complicated tax matters. If you have questions and need clear advice from tax attorneys who have business experience, and can provide value to resolve your matter, contact the team at Milikowsky Tax Law and access our expert resources for handling these situations.

What To Do After You Miss a Tax Deadline

When you’re running a business, it can be difficult to keep track of all the things you need to do — and when — to keep your company safe and in good legal standing. If you’ve missed the official deadline to file your taxes, you’ll need to speak to the IRS as quickly as possible. There will be a penalty for filing taxes late, but the sooner you address this issue, the better chance you have to minimize the amount of penalties you may owe and the collection action IRS can take (i.e. levies on bank accounts, liens, etc.).” The penalty for failing to file a timely return is generally higher than the penalty for failing to pay the full taxes owed. Thus, once you discover your tax returns have not been filed, you should act quickly to gather your records and work with your accountant or CPA to have the returns prepared and filed.

If you’ve missed a deadline, you probably have a lot of questions swirling in your head: How late can you file your taxes? What kind of consequences can you expect for being behind? Who should you contact first? Don’t panic.

Consequences of Missing a Tax Deadline

As soon as you realize that you’re late in paying your taxes, it’s important to seek help as quickly as possible. If you can pay the money owed quickly enough, you can reduce a lot of stress in dealing with the IRS. Even if you respond promptly, you should prepare to face a penalty for filing taxes late. This may include meeting with a trusted tax attorney and your own financial advisor to plan for the financial effects. Browse our resources below to help you understand what happens if you miss a tax deadline and how it will impact your finances.

What To Do If You Can’t Pay Your Tax Bill On Time

If you realize you cannot pay your taxes in full, you do have options, such as:

  1. Request an installment agreement with IRS or the California State tax agency;
  2. Contact IRS or the California state tax agency to request an extension to full pay the liability (not through a long-term installment agreement because you only need a couple extra months).

If you are having a financial hardship, you may qualify for an Offer in Compromise (“OIC”), which is a request to IRS to settle your tax liability for a lesser amount based on a “Doubt as to Collectibility” or “Doubt as to Liability.” These issues involve intricate tax laws, legal issues, and a thorough analysis of a person’s finances (including preparing a bank account analysis and financial statement). If your business owes taxes, the company’s legal tax issues and financial analysis must also be thoroughly analyzed. The best thing you can do is speak to an experienced tax attorney and develop a custom strategy for resolving your outstanding balance with the IRS.

What Are Back Taxes?

Back taxes arise when your personal or business taxes are not paid in full by the due date. For income tax, payroll tax, and sales tax, these can be quarterly and yearly. Over time, they accrue interest, and can also come with a host of other penalties to consider. If you’re wondering what the penalty for filing taxes late might be, back taxes are a common consequence.

  • Read our overview of what back taxes are and how they affect your business.
  • Check out our guide on back taxes and learn how our team can help you resolve them.
  • Browse our expertise and insights on outstanding tax balances, what you need to know about them, and how you can seek professional guidance.

Resolving Your Tax Debt

No one wants an ongoing tax debt to worry about when they are trying to run a successful business. There are several ways to resolve your tax debt, from agreeing to pay back a portion of the money owed each month (i.e. an offer in compromise), to requesting an extension of time to pay. Even if you owe the IRS more than you can afford to pay, there are solutions available — such as an offer in compromise. The best decision you can make is to start with an experienced tax attorney who understands your business and can offer clear solutions to resolve your tax issue.

Attorney reviews options for handling back taxes
Many people don’t know the options that are available to them when dealing with back taxes and the IRS.  Back taxes are a nightmare for anyone that owes the IRS money without the means of paying it. If you are already in debt, the IRS banging on your door doesn’t help your situation—it just makes it more stressful.  If you owe a lot of back taxes, you don’t have to panic; you have options. Let’s discuss.

First, What Are Back Taxes?

Back taxes are “taxes that have been partially or fully unpaid in the year that they were due. Taxpayers can have unpaid back taxes at the federal, state and/or local levels. Back taxes accumulate interest and penalties on a regular basis.”

Understanding Back Taxes

Back taxes refer to taxes owed from a prior year.  A taxpayer may be behind in paying taxes for intentional or unintentional reasons. Some of these reasons include:
  • Filing a return and failing to pay the tax liability
  • Failing to report all income earned during the tax year
  • Neglecting to file a tax return

What Happens if a Taxpayer Doesn’t Pay Back Taxes?

Unpaid back taxes can be a serious issue for many taxpayers who don’t have the means to pay them.  If a taxpayer does not pay back taxes they owe, they can face a range of consequences from the government. Some strategies the government may use to get a taxpayer to pay back taxes include:
  • Pressing charges
  • Demanding the taxpayer pay immediately 
  • Offer a voluntary disclosure program (to help avoid criminal charges)
  • Offer payment options
If back taxes are not paid, some consequences may include IRS:
  • Seizing property
  • Seizing assets
  • Placing liens on the property
  • Placing a federal tax lien to inform other creditors of the taxing authority’s legal right to a taxpayer’s assets and property.
  • Garnishing a taxpayer’s wages and to levy their financial accounts, seizing up to the total amount of taxes owed. 
Failure to pay taxes can also involve imprisonment. However, if you owe back taxes, you don’t need to panic. Let’s take a look at some of your options. 

What Are Your Options For Handling Back Taxes?

Some solutions our San Diego back tax attorneys can provide include:

A Payment Plan 

Agreeing on a monthly payment amount that is feasible and not strenuous can make all the difference. Our tax lawyer can help facilitate an agreed amount that works for both you and the IRS.

An Offer in Compromise 

An offer in compromise allows you to settle your debt with the IRS for much less than what you owe.

Declaring Non-Collectible

When you declare non-collectible, the IRS immediately stops trying to collect from you for approximately one to two years.

Abatement of Penalties

Through this method, you can seriously reduce the amount you owe the IRS, by reducing the costs of the penalties and interest against you.

Contact Milikowsky Tax Law

If the IRS is telling you to pay your back taxes in a payment plan you can’t afford, contact our San Diego back tax lawyer today. Our legal team at Milikowsky Tax Law is well-versed in tax law procedures and options; we are ready to assist you through this difficult time.  Our committed tax law firm can answer your questions, explain your options, and guide you towards the best game plan for you. At Milikowsky Tax Law we are experts in providing legal counsel for dealing with unpaid taxes.
Shot of a young couple sitting on the sofa at home and ignoring each other after a fight

The discovery that a spouse has lied about your shared finances can be devastating. On top of that betrayal, being sent a notice from IRS placing tax burdens on the innocent party can throw even the most financially prepared individual into a state of deep concern.

If IRS should find mistakes or fraud on joint tax returns filed by you and your spouse, legally, both parties are liable for the errors. Situations where one spouse was not aware of their partner’s decisions or behaviors can lead to serious negative financial impact for the innocent spouse. While being involved in all financial statements submitted with your name on them is the best protection, IRS also offer “Innocent Spouse Relief” in cases where your spouse has acted without your knowledge.

Requesting Innocent Spouse Relief

Asking the IRS for relief from a joint tax filing is a complicated process, which begins with filling out an innocent spouse relief form.

You and your tax attorney will need to prove that your spouse acted without your knowledge. This could apply to issues like:

  • Failure to declare income
  • Underreporting income
  • Claiming fraudulent deductions

Once we are able to successfully prove that a tax law error took place without your knowledge, there are three types of relief available, including:

  • Relief from paying interest, tax, and penalties
  • Relief by separation of liability (when taxes and penalties are split between the spouses)
  • Equitable relief in an underpayment or understatement of tax

Get Support for Tax Issues as an Innocent Spouse

While the situation surrounding filing for Innocent Spouse relief can be overwhelming, the team of professionals at Milikowsky Tax Law have years of experience in both tax law and business planning. We can help you to build a compelling case for your right to innocent spouse relief, using our proprietary audit metric technology and our in-depth knowledge of tax law and IRS negotiation.

Our experienced tax lawyers thoroughly research your specific situation and will help you to develop a clear and irrefutable argument for tax relief.

Following your filing for Innocent Spouse Relief, you can rely on the Tax Lawyers at Milikowsky Tax Law to be there to review future filings to ensure that deceptions that lead to the need to file for Innocent Spouse Relief do not recur.

Contact Milikowsky Tax Law today to find out how we can help you submit an innocent spouse relief form and extricate yourself from undeserved tax burdens.

Close-up Of A Businessperson's Hand Balancing Stacked Coins On Wooden Seesaw With Finger Over Desk

At Milikowsky Tax Law we are experts in providing legal counsel for dealing with unpaid taxes.

Back taxes are a nightmare for anyone that owes the IRS money without the means of paying it. If you are already in debt, the IRS banging on your door doesn’t help your situation—it just makes it more stressful. If the IRS is telling you to pay your back taxes in a payment plan you can’t afford, contact our San Diego back tax lawyer today. Our legal team at Milikowsky Tax Law is well-versed in tax law procedures and options; we are ready to assist you through this difficult time.

Your options for handling back taxes:

Many people don’t know the options that are available to them when dealing with the IRS. If you owe a lot on back taxes, you don’t have to panic. Our committed tax law firm can answer your questions, explain your options, and guide you towards the best game plan for you.

Some solutions our San Diego back tax attorneys can provide include:

  • Payment Plan – Agreeing on a monthly payment amount that is feasible and not strenuous can make all the difference. Our tax lawyer can help facilitate an agreed amount that works for both you and the IRS.
  • Offer in Compromise – An offer in compromise allows you to settle your debt with the IRS for much less than what you owe.
  • Declaring Non-Collectible – When you declare non-collectible, the IRS immediately stops trying to collect from you for approximately one to two years.
  • Abatement of Penalties – Through this method, you can seriously reduce the amount you owe the IRS, by reducing the costs of the penalties and interest against you.

If the IRS starts to call you about paying your back taxes, it is imperative to retain a tax lawyer as soon as you are able. The IRS uses the information you provide them to decide when and where to place liens, levy, and seize your property and assets. By letting our seasoned San Diego back tax lawyer handle your situation, you don’t have to fear accidentally stumbling into an even more complicated situation with the IRS.

Don’t hesitate to call Milikowsky Tax Law for help. Our legal team is ready to come up with the appropriate plan to best benefit you!

File tab with focus on savings. Conceptual image for illustration of debt vs savings

SAN DIEGO TAX LIEN LAWYER

UNDERSTANDING TAX LIENS AND HOW THEY IMPACT YOU

Having the IRS knocking at your door and declaring that your property belongs to the government isn’t the ideal situation for anyone. At Milikowsky Tax Law we have represented many tax lien cases and helped our clients keep their property and assets. If you have been issued a lien, do not hesitate to call for help. Our San Diego tax lien attorney explains what you need to know if the IRS has notified you.

WHAT IS THE TAX LIEN PROCESS?

A lien is the government’s legal claim to your property if you do not pay your tax debt. Your personal property, real estate, and financial assets are all subject to government claim. A lien begins when the IRS assesses your liability and sends a Notice and Demand for Payment. If you do not pay the full amount of debt by the date it is due, the IRS will file a Notice of Federal Tax Lien to notify creditors that the government has the legal right to your property and assets.

CAN YOU GET RID OF A LIEN?

The best way to remove a lien is to pay your debt in full. Within 30 days of paying the debt, the IRS will release your lien. As an experienced tax law firm, we know that not everyone is in a position to be able to pay off their debt in full. If you contact our San Diego tax lien lawyer, we can explain to you your various options for reducing the severity of your lien.

You can reduce the impact of a lien through:

  • A discharge of property: This removes the lien from a specific property.
  • Withdrawal: This removes the public Notice of Federal Tax Lien.
  • Subordination: This allows creditors to move ahead of the IRS.

By working with a dedicated and knowledgeable tax and IRS law firm, you can learn more about the options available to you during this difficult and stressful time. Contact Milikowsky Tax Law today and our team can help you navigate the complexities of your legal situation.

OVER A DECADE OF EXPERIENCE RESOLVING TAX MATTERS

When you need legal counsel, do not hesitate to contact our firm. Milikowsky Tax Law was voted one of San Diego’s best tax attorneys and is considered among the top San Diego law firms by the San Diego Business Journal. When you need a tax lawyer, you should never settle for second-best. Our firm is ready to provide you the advocacy you need!

Call our San Diego tax lien attorney today at (858) 227-6931 and request a confidential consultation.

Group of business people meeting, discussing, analyzing graphs, financial data, and planning a marketing project together.

Milikowsky Tax Law is available to help with your business tax concerns ranging from defending your business in an IRS or California state tax audits to resolving your tax balance. Aside from our primary focus areas, we also specialize in helping companies resolve tax issues involving:

Collections: Levies, Wage Garnishments, Asset Seizures

Collections refer to the process where IRS collects money or assets from your business to pay your tax balance. Common collection methods include:

  • Levy: IRS seizes property (bank accounts or money owed by your business clients)
  • Wage garnishment: Your wages are taken to contribute to tax payments
  • Asset seizure: IRS seize your house or other property

If the IRS sends you a seizure or collection notice relating to any of the above topics, contact Milikowsky Tax Law and speak with a tax attorney immediately. We will work to protect your assets and ensure your business stays in business.

Cross-Border Transactions

Is your business spanning geographical borders?

While global expansion can be excellent for the growth of your company, it also exposes you to new tax concerns. To avoid having either the IRS or an alternate authority dictate your intercompany pricing policies, you’ll need to establish your own pricing standards.

At Milikowsky Tax Law, we help you provide documentation to IRS that highlights the financial structure of your cross-border organizations to keep your business in compliance.

FBAR Reporting Compliance

If you or your company has assets beyond your immediate geographical borders, you may have bank accounts in different countries. These accounts must be declared by filing an FBAR, which refers to Form 114, or Report of Foreign Bank and Financial Accounts. You must file Form 114 with the Financial Crimes Enforcement Network (FinCEN) to remain compliant with the IRS.

The FBAR filing deadline is separate from your overall tax return and the filing doesn’t go directly to IRS, although it is crucial in keeping compliant with IRS. At Milikowsky Tax Law, we help you ensure you remain in compliance with the Bank Secrecy Act (BSA).

Contact us to talk about options to resolve your FBAR reporting issues.

Corporate Reorganizations

As your company grows, you might decide to pursue a merger or acquisition that will help you unlock new opportunities. This will mean adjusting the structure of your enterprise, which is a complicated process from a tax perspective. You may also need to resolve a tax balance or issue relating to the company you are looking to acquire.

There are various forms to complete and declarations to be made to ensure that you remain on the right side of the tax law when reorganizing your business through a merger, acquisition, or otherwise. The team at Milikowsky Tax Law is well-versed in small business tax matters — most of us have been small business owners ourselves, so we speak from experience. Call our expert team to help you prepare for the next stage in your company’s future.

Tax Planning (Partnerships, Corporations, and Individuals)

Tax law involves many intricacies and everyone can benefit from the specialized knowledge of an experienced tax attorney. Milikowsky Tax Law offers tax planning services for partnerships, corporations and individuals to help guide you through the nuances of tax law management.

Using our proprietary system, we’ll make sure that you don’t miss anything that could disrupt your estate plans, mergers, acquisitions, growth strategies, or future business plans.. No matter what your role or stake in a business venture, we’ll give you the guidance you need to handle taxes with confidence and navigate IRS communications.

Reach out to Milikowsky Tax Law for trusted legal tax support every step of the way.

Chain Reaction In Business Concept, Businessman Intervening Dominoes Toppling

SAN DIEGO TAX COLLECTIONS ATTORNEYS

WE WILL WORK TO KEEP YOUR BUSINESS IN BUSINESS

At Milikowsky Tax Law, we aggressively fight to defend our clients’ legal rights against tax collections efforts from the IRS and state tax agencies, helping them maintain control of personal and business assets. If you have a severely high tax balance, our San Diego tax lawyers are here to help you understand your options, ward off penalties, and regain financial stability. Our goal is to exceed your expectations in the value we provide.

HOW THE TAX COLLECTION PROCESS WORKS AGAINST BUSINESSES

When your business owes significant taxes, the IRS may refer your case to a local revenue officer, who will contact your office to review financial records. If the officer concludes that your company is able to pay its tax liability, the revenue officer can employ tax collections methods. These could include levying the company’s bank accounts, seizing company assets, and filing liens to protect the government’s interest.

When a business owes either state sales tax or federal / state payroll taxes, individuals can be held personally liable for a portion of the business’ tax liability. If an individual is held responsible for payment, the IRS or California state tax agency can then begin a collection action against the individual. Delinquent payroll taxes can be collected for up to 10 years from the date the tax is assessed. Our San Diego tax collection lawyer can assist.

AGAINST INDIVIDUALS

Upon the conclusion of an audit by the Internal Revenue Service (IRS), the IRS Revenue Agent will issue a 90 Day Letter, also known as the Notice of Deficiency (NOD). The purpose of the NOD is to give a taxpayer a means to contest the IRS proposed assessment before collection proceedings begin. Once an NOD is issued, the taxpayer must file a petition with the U.S. Tax Court within 90 days of the date appearing to preserve their right to contest the deficiency. If the taxpayer does not file a U.S. Tax Court Petition before the 90 day time period expires, the IRS will assess the tax and the tax becomes debt owed to the U.S. government.

The IRS has 60 days after it makes an assessment to give the taxpayer the notice and demand for payment. If the taxpayer fails to pay taxes after a demand for payment is made, the tax becomes a lien on all taxpayer’s real and personal property until the liability is paid.

METHODS OF IRS TAX COLLECTION

There are several methods that the IRS may use in tax collections for back taxes owed by a taxpayer or a company that has been singled out for unpaid taxes. These potentially devastating techniques include:

  • Filing a public tax lien against you
  • Pursuing constructive dividends
  • Garnishing wages
  • Levying, or freezing, bank accounts
  • Seizing a company’s accounts receivable from debtor clients
  • Issuing trust fund recovery penalties
  • Making attempts to close a company’s doors

Whatever problem you face with the IRS, we are prepared to fight for you. We can put our negotiation skills to work in an attempt to lower the taxes and penalties you face. From securing an offer in compromise to setting up an installment agreement, we will find a solution that is right for your situation. Bankruptcy may also be a viable option to consider. Other options that an individual can pursue include filing for innocent spouse relief or proving that you are eligible for “currently not collectible” status.

If your company has serious tax issues, such as a dangerously high tax balance, we are here to help you keep your doors open. Call our San Diego tax law firm for the legal support you deserve!

Woman handing paperworks to a man

Everyone makes mistakes from time to time, but when it comes to your tax return, a single error could lead to countless problems with the IRS. While getting chosen for an audit doesn’t always mean that you’ll end up owing more taxes. However, it can result in changes that will affect how you report a transaction on future tax returns or possibly result in a criminal investigation.

Close to 1 million tax returns are audited every year in the United States. So, how do you reduce your chances of being picked?

Founder of Milikowsky Tax Law, John Milikowsky, will be speaking at the Tax Empowerment Seminar on February 8, 2019, to answer all of your questions about identifying and avoiding red flags on your tax return.

Protect Your Business from the Threat of an Audit

Tax audits aren’t just risky for the people who exaggerate their deductions or sweep certain income under the rug. The IRS primarily audits a tax return to ensure compliance with the tax laws and to uncover mistakes and inaccuracies on tax returns. The choice to audit your business often comes down to the number of red flags identified on your tax return.

This means that you’ll be under scrutiny for potential additional interests, civil penalties, civil fraud penalties, or possible criminal action. Civil penalties are assessed on the discrepancies in the amount of tax reported on your tax return that can lead to substantial additional costs, including as much as 40% of any underpayment in tax. Serious discrepancies that show a pattern of errors may give the government justification to pursue a criminal conviction for tax evasion or fraud.

Learn how to protect your business from these risks at this year’s Tax Empowerment Seminar, from the leader of one of the country’s most well-renowned audit management attorneys. John Milikowsky will talk you through the steps to help you identify potential errors on your tax return and minimize the risk of an IRS audit before you file your tax return with the IRS.

Learn How to Reduce Your Risk of Audit from an Experienced Tax Attorney

As the founder of Milikowsky Tax Law and a long-term business owner just like you, John Milikowsky knows how to protect companies from the potentially destructive results of an IRS audit. In fact, he was selected as one of the top 5 best tax lawyers in San Diego by the Union-Tribune Readers Poll in 2015. In 2009, John Milikowsky presented a proposal to Congressional committee staff members, IRS, and U.S. Treasury to assist taxpayers in reducing penalties when a tax return contained an inadvertent error.

He leads an experienced and impressive team of tax professionals to guide each client through the complexities of legal tax matters, one step at a time. With over a decade of experience in tax law and navigating audits, and many years of business experience, Mr. Milikowsky knows firsthand how to identify the most common red flags that can put your business at risk of being audited — and he can teach you how to look out for errors on your own tax return.

In this year’s Tax Empowerment Seminar, Milikowsky will be sharing his secrets, insights, and exceptional advice with you.

Details of the Event

On Friday, February 8, John Milikowsky will take the stage at the Corporate Alliance for an engaging 2-hour experience to teach you all about identifying potential problems on your tax return. Doors for the main event will open at 7:30 am so you can join your peers for breakfast. The official workshop and seminar will begin at 8 am.

In creating our proprietary audit metric technology, Mr. Milikowsky has learned a lot about analyzing the more delicate details of tax returns. With years of experience in handling hundreds of tax audits and representing many businesses who are audited by IRS and the various California tax agencies, Mr. Milikowsky will be on hand to talk with you about your concerns with tax issues.

Bring along your bank statements, profit and loss reports, tax returns (all for the same tax year), and use our innovative MTL ClearTax Transparency workbook to see the results for yourself. By the time you leave the seminar, you’ll have more knowledge about how to read a tax return and understand how the IRS audits a tax return.

Mr. Milikowsky will be inviting an IRS Criminal Special Agent to the stage to discuss the key 2019 objectives the IRS will be focusing on this year and the red flags that will be most important in 2019.

Join Us for the Ultimate Tax Preparation Event

Discover what it feels like to have an experienced tax attorney at your side, guiding you through the tax return process with accuracy and relentless dedication. You can even bring your CPA along and spend some time discussing your tax return.

Are you ready to take the best possible step for your tax return this year?

Sign up for the Empowerment event today, and we’ll see you there!

Man smiling while holding a paper

Two people hover over their taxesCome tax season, many individuals and businesses find that they are unable to pay their full tax burden on time. Despite how common this predicament is, a sizable portion of taxpayers don’t know what options are available in these circumstances. In order to best resolve outstanding debts and keep from deepening your IRS troubles, it’s important to understand the many government and nongovernment options.

Researching the offerings, making a plan, and following through on how best to pay taxes owed will avoid long-term negative consequences and the anxiety that lingers with unpaid federal taxes.

First Step: File Your Return

First and foremost, it’s important to know that a delay in filing your tax return does not buy you time with the IRS. The taxes are owed regardless of filing status, and interest accrues daily on unpaid assessments. Furthermore, the IRS can levy additional fines for filing late, which only compound the severity of the situation. Put simply, there is no reason not to file your taxes on time, even if you can’t pay a dime of the amount owed at the time of filing. If necessary, request an extension of the filing deadline. A six-month extension is easy to obtain, but you must request it before April 15.

If you do not file your taxes and you owe the IRS, they are permitted to undertake several actions, including filing a federal tax lien on your property, which affects your credit rating and cannot be released until all taxes and related fees, penalties, and interest are paid in full. They may also seize wages, bank accounts, benefits, retirement income, trust funds, accounts receivable from debtor clients, future tax refunds, and property, inclusive of real estate and vehicles, in order to make the account whole. The IRS does not hesitate to take aggressive action to recover unpaid taxes.

Immediate Options

If you are well under your limit on your credit card, you might consider paying off your tax bill that way, because it’s likely that the interest you’ll pay on your card is less than the IRS fees and penalties that you’ll face otherwise. In fact, the IRS specifically suggests this.

You could also use a home equity line of credit to pay off taxes. Because this is secured, your interest rate will be lower than either a credit card or an IRS installment plan — but remember that your home becomes the collateral in this scenario.

You could also borrow the money from a trusted friend or family member, if you are fortunate enough to be able to do so. If you know someone living off interest income, they could offer you a loan with a higher interest rate than they’re currently receiving from their financial institution, making it a win for both of you.

None of these situations is ideal to be in. However, going one of these routes will keep you from running afoul with the federal government. Most folks would rather owe money to a credit card company, bank, or family member than to the IRS.

Working With the IRS

If you cannot pay your full tax burden immediately after filing, don’t stress! This issue is common, so the federal government has developed several options. It may be worth your while to speak with a tax professional about which of the following options is in your best interest.

Installment Agreements

The IRS allows up to 120 days to pay the taxes due in full. You do not need to fill out an application, and there is no fee or formal arrangement for this 120-day window. The downside, however, is penalties and interest will compound until the full payment is received.

The IRS also offers monthly installment plans for those who owe less than $50,000 in taxes, fees, and penalties. Take stock of your total assets, total debts, and monthly income to sketch a general portrait of your financial health and determine how much you could pay each month toward your tax burden.

Four different installment agreements are available through the federal government, though each has its own user fees associated. Direct debit installment plans typically offer lower fees than others and guard against defaulting by automatically making the payments for you. More information on these agreements can be found here.

Electronic payments can be made via the IRS website’s Direct Pay system, which allows you to transfer money from checking and savings accounts at no additional cost. You may also use Direct Pay to pay on prior years’ taxes and view current and past payments. The IRS also offers its IRS2Go mobile application, where users can make payments, check the status of those payments or refunds, and find free tax preparation assistance and helpful tips. These features may be more convenient to you than by paying through a check or money order in the mail.

Please note that operating businesses that owe employment-related taxes will need to communicate directly with the IRS to find a satisfactory payment arrangement.

Other Options

For those who feel they cannot make any payment right now and still afford reasonable living expenses, the IRS offers a status called “Currently Not Collectible,” wherein they will not seek any payments for the time being. You will have to complete a statement and provide proof of your financial status, including monthly income and expenses. The debt is not forgiven, however, and interest will continue to grow on the debt.

If you feel you will not be able to pay the full debt, or that doing so would create a financial hardship, you can request an “Offer in Compromise,” or OIC. You and the IRS work together to find a lump sum or periodic payment offer, though the process is very lengthy and can last years. The pre-qualifying questionnaire will help determine whether you could take advantage of the OIC. This option does not apply to individuals or businesses currently in a bankruptcy proceeding.

Don’t Fret

If you have complicated or dire tax issues, including very high balances or long periods of delinquency, do panic. The IRS doesn’t exactly have a reputation for friendliness, but the simple fact is that they would rather collect the money they are owed than dole out unnecessary punishments. That’s why they’ve created many options for those facing tax troubles.

Woman using a laptop

Proud business owner stands smiling in his small shop

The lifeblood of every business activity is money, and small business owners need to hold on to as much of it as possible to keep their companies afloat.

The IRS gives small business owners some wiggle room in the form of tax deductions. Yet with so many available — from interest deductions, to payroll, to some small purchases — it’s hard to determine how to make the most of them.

To help you do so, let’s take a look at some common (and not so common) deductions that might apply to you.

Getting Started

The IRS allows small business owners to take advantage of tax deductions from the start by making start-up costs deductible. More specifically, expenses that can be deducted may include:

  • Start-up Costs: Costs associated with researching, investigating, and setting up your small business may be tax deductible. Possible expenses include travel, meals and entertainment, state filing fees, and franchise fees.
  • Rent: Any space rented for your business, such as an office or warehouse, can be deducted in full.
  • Co-working Space Fees: Paying rent isn’t always possible, or necessary, at the early stage of business growth. Sometimes working from a co-working space is enough, and you may be able to deduct usage fees just like a home office or rented office space. To see if you qualify, make sure to have a receipt that states the origin of expenses to pass to your accountant or tax attorney.
  • Business Debt Interest: Interest on business credit cards or loans is typically tax-deductible. Interest on personal credit cards or loans used to finance your business may also be allowed. Keep in mind that with personal financing you must have proof to show how money was spent. Otherwise, you may face penalties for incorrectly claiming a deduction. If you’re unsure, ask a professional for help defining which debts are eligible for tax deduction.

Operations

The IRS allows businesses to fully or partially deduct operations costs from the following activities:

  • Vehicles and Mileage: Small businesses that require business vehicles, such as delivery services, can deduct maintenance and purchase expenses in full. Small business owners can also deduct mileage for work-related trips if they use a personal car (2017’s deduction rate is 53.5 cents per mile). Keep in mind mileage deductions apply when driving to and from a specific destination for work, such as a business meeting. Daily commutes from home to your place of work aren’t deductible.
  • Payment Processing Fees: Small businesses may use payment processing services like PayPal to send and receive payments. Although these companies charge processing fees that eat into your profits (PayPal’s is up to 2.9% + $0.30 per sale in the U.S., for example), they may be tax-deductible.
  • Utilities: Small business owners who use a home office may be able to deduct a percentage of their utility bills. This is done by calculating the percentage of your home office to your total living space, then applying that percentage to your utility bills.
  • Phone Use: Similarly, small business owners may be able to deduct a percentage of their personal phone bill if your personal phone is also used for business purposes. Remember, again, that detailed record-keeping is essential if you wish to do this. Keep detailed records of how much phone time was dedicated to your business.
  • Depreciation: The IRS allows business owners to deduct the depreciation of equipment purchased for the company with a value of up to $500,000.

Labor

The IRS allows small business owners to deduct expenses related to paying workers and incentivizes for providing benefit programs, including:

  • Salaries and Wages: Salaries given out to employees are tax-deductible. Remember this does not include salaries paid to business owners such as sole proprietors, partners, and LLC members.
  • Contract Labor: The costs associated with paying contracted workers are deductible like hired employees. Just remember to file a Form 1099-MISC for workers who’ve earned more than $600.
  • Commissions: Payments made to your sales staff working on commissions are deductible, as are third-party commissions you might pay an affiliate partner for referrals.
  • Employee Benefit Programs and Qualified Retirement Plans: The costs associated with providing employee benefits programs, such as continuing education, are fully deductible.

Bad Debts

It’s not enjoyable, but most businesses will face non-paying clients or suppliers at some point. Fortunately, businesses can write off the following types of bad debts:

  • Loans to clients and suppliers
  • Credit sales to customers
  • Business loan guarantees

It’s important to note that the ability to deduct bad debts may depend on the type of accounting method you use for your business. Those using a cash accounting method don’t record a sale until payment is received, and therefore don’t have records off of which to base the debt. The IRS doesn’t allow businesses using this method to deduct bad debts. The accrual accounting method counts income once a sale is made, regardless of when you receive payment, so businesses using this method would have records to support a deduction for a bad debt.

Miscellaneous

Let’s not forget the many other types of deductions available to small business owners that can add up to significant savings when used properly, including:

  • Magazine Subscriptions: Yes, even magazines that you leave in your office’s waiting room may be tax-deductible. Remember to only count magazines used solely for your business — magazines brought from home aren’t eligible.
  • Meals and Entertainment: Money spent on business-related meals and entertainment may be up to 50% deductible, though the IRS has stipulations on what qualifies. If you aren’t sure, talk to an accountant or tax attorney to ensure you don’t claim incorrect deductions.
  • Travel: You or any employee that travels for business can fully deduct lodging and transportation expenses.
  • Supplies: Office supplies, cleaning supplies, and other items used for your business are fully deductible.

Getting the Most of Your Tax Deductions

Tax deductions can help small businesses hold onto extra cash to support business growth. It’s wise to be aware of all available small business deductions so you don’t leave hard-earned money on the table; but remember, not all tax deductions apply to every situation. Claiming deductions to which you are not entitled, even by accident, could lead to an audit or other IRS troubles that no small business needs on their hands.

The IRS tax code has many rules and stipulations that may affect your eligibility. Consider turning to a professional to make sure you’re taking the right deductions and amounts. And don’t forget: fees you pay for tax preparation are themselves deductible.