As a small business owner in New Jersey, you know the importance of paying your business income taxes on time. However, running a business is unpredictable and various things can happen that make you unable to pay your taxes.
What happens if you don’t pay your business income taxes depends on your specific situation. You will be assessed penalties and interest if you do not make any payment by your due date.
Pay whatever you can or request an extension
You should try to make any payment that you can, although you may still receive an underpayment penalty. Even if you make a partial payment, you can be charged interest on any unpaid balance or penalty.
It is best to not simply ignore your tax bill. Communicate with the IRS and tell them about your situation. You might qualify for a 120-day extension if your amount owed is less than $100,000, including tax, interest and penalties.
Try to obtain a payment plan
As an alternative to an extension, you can potentially be offered different ways to pay your taxes. When you cannot make the full payment, you may be able to set up a payment arrangement.
The penalties can become more severe over time if your full or partial balance remains due and you have not set up a payment plan. The IRS has the power to place tax levies or liens on your business property or bank accounts.
See if you qualify for an offer in compromise
If your business has fallen on tough times, and you don’t see a way you will be able to pay the taxes, you can request an offer in compromise. This involves the IRS agreeing to settle the debt for less than the amount owed.
If you do not pay, or set up a payment plan, a tax lien is filed with your local court and is a public document. This means that your creditors can see that the IRS has a lien on your property.
The stress of owing taxes you cannot pay can be overwhelming and cause you stress. Having the advice and guidance of an experienced business attorney is essential to help you navigate a complex issue like this.