Does your small business owe back taxes? The IRS will mail millions of letters to taxpayers this summer. It’s essential to address the issue to avoid penalties and interest charges. Some options can help you escape from a burdensome tax debt if you struggle to pay back taxes. On today’s The Small Business Show, we’re talking to Alyssa Maloof Whatley, Tax Attorney at the Law Office of Alyssa Maloof Whatley, to tell us more about what taxpayers or business owners need to know if they owe back taxes.
Alyssa is an experienced attorney helping clients with debt, IRS tax relief, audits, and U.S. Tax and Bankruptcy Court litigation. She specializes in obtaining debt relief through bankruptcy, offers in compromise, innocent spouse relief, and penalty abatement. She also is a strong legal professional skilled in financial analysis and settlement negotiations. Alyssa notes, “Being a business owner can be difficult, especially when you already have a lot to accomplish and don’t need distractions.” Sometimes, owners receive offer letters, Alyssa continues, “But it doesn’t necessarily mean it’s from the IRS.” She further explains, “If entrepreneurs deal with tax audits or collection issues with the IRS or state tax attorney, any of those things can make owners feel uncomfortable or frustrated.” But, it’s important to note most IRS employees have never been business owners, they can appear aggressive.
Most taxpayers are unaware that the burden of proof lies with the taxpayer in virtually every civil tax lawsuit, audit, or collection matter. Unlike criminal proceedings, the burden of proof rests with the government. Alyssa asserts that “Timing is everything.” Therefore, a letter is our country’s standard form of due process. However, owners waive their rights when they discard IRS letters. Alyssa adds that the most crucial action after receiving a letter from the IRS is to “verify it’s actually from the IRS.” There are a lot of scam agencies and tax resolution firms posing as the federal government, saying that they can help you with your tax debt. But, to prevent you from getting scammed, go to IRS.gov to verify your letter number, or the taxpayer advocacy group offers a taxpayer roadmap to guide you to the correct location of your debt.
Additionally, the government is building a massive database of information to represent those taxpayers who under or misfile their taxes. They are generating several automation systems from which your letter probably originated. “To me, that’s what Americans should be concerned about, especially with the upcoming election cycle,” asserts Alyssa. Furthermore, “Back taxes can be forgiven,” she adds. There are different programs, but each person’s ability to resolve their tax debt with the federal government is based on their own facts and circumstances.
Ultimately Alyssa asserts, “The easiest way to explain it, the government does have a series of fresh start programs. If you owe $50,000 or less, you can set up an installment agreement over 72 months with no questions asked.” Additionally, because the government typically has ten years to collect back debt, entering into a partial payback agreement results in a lower payment than initially anticipated because the debt would expire. “The ‘Offer and Compromise’ is the most utilized program because business owners’ debt no longer becomes legally enforceable. The other method owners choose is from the widely broadcasted advertisements on the radio since it’s based on the ability to pay.