Updated September 27, 2022
Resolving a business (or individual) tax liability can be overwhelming, especially if you haven’t dealt with the issue before. Your instinct might be to call your local attorney who helped you set up your business, or your CPA. It’s even tempting to do a quick Google search. Unfortunately, you’ll only be inundated by a ridiculous number of tax resolution companies making unrealistic promises. Who do you trust? How do you make an educated decision with so much information? Realistically, none of these options are good ones. Hiring a tax specialist is the best option. A qualified tax specialist can resolve IRS liabilities and, if you are working with a lender, preserve funding. Here are some important things you need to consider.
Business Tax Resolution Specialization
The IRS is difficult – they don’t even understand their own rules. So, it’s important to work with someone who understands the IRS, especially if you are also working with a lender. Inexperienced representatives learn lessons the hard way, usually at their clients’ expense. If you don’t follow certain rules, the IRS can seize assets or levy accounts. A bank levy can effectively put you out of business. A tax specialist knows how to use the IRS’s rules to prevent enforced collection, thereby protecting your business. A tax specialist also knows how to save you money through a partial payment installment agreement or an abatement of penalties.
Experience in Business Lien Subordination
Business owners should work with experienced representatives. For example, most inexperienced representatives submit financials without proposing a specific repayment amount when “negotiating” a repayment arrangement. It may not seem like a big deal, but the devil is in the details. The best way to keep the IRS from taking your business’s money is to submit a formal request for an installment agreement (repayment plan). If there’s no proposal in place, the IRS can proceed with levies. But with a formal proposal in place, the IRS cannot levy (take the money from) bank accounts or receivables.
Additionally, an inexperienced representative who doesn’t submit a proposal with the financial statements is not really “negotiating” anything. Instead, the representative is waiting for the IRS to tell him/her what the business can afford. In that case, the IRS gets to frame the issue. Allowing the IRS to determine what the business can pay monthly is a terrible strategy and almost always ends poorly. 95% of installment agreements with the IRS fail because the business cannot afford the payment – the IRS sets the business up for failure. Avoid these problems by working with a specialist with considerable experience in IRS negotiations.
Preserving Funding
Your representative must understand how an IRS liability affects your lender. If you’re working with a bank, asset-based lender, or factoring company, an IRS (or state tax) liability can destroy the funding relationship. An experienced tax specialist knows how to work with the IRS to preserve funding for your business. The IRS is complicated on its own. But, dealing with the IRS while also taking into account lenders’ concerns is exponentially more difficult. Local attorneys and CPAs don’t understand lenders’ concerns, so they can’t solve them. They struggle for a few reasons – some representatives aren’t familiar with factoring in general. Most representatives have never heard of the 45-day rule.
Tax Guard Makes the Client a Priority
You and/or your business are our client. Because most businesses can’t survive without funding, we keep the lender updated as to the process of our negotiations. Of course, we do so with our clients’ permission. Uninformed and anxious lenders kept in the dark tend to cut off funding. Everything we do is designed to avoid that outcome.
We work with businesses that owe money to the IRS that are also working with a bank, asset-based lender, or factoring company. We understand the sense of urgency required to preserve the funding relationship. By resolving the liabilities in the proper manner – submitting the proposal, securing the agreement, and negotiating a subordination – we can preserve funding so that everyone wins.
When federal tax issues arise, don’t wait for the IRS to file a tax lien or issue levies. Be proactive. It’s best not to try to deal with the IRS on your own. Fill out the form below to speak with a specialist about how we can help.