Over the duration of this series, we have covered a range of issues within the topic of a business owing the IRS unpaid taxes. Diving deeper, we've discussed the motion of the experience, what to expect from the IRS, things to avoid doing and how to walk down the path towards a successful resolution.
However, it's important to point out that even after a successful conclusion, there is work still to be done. Sustaining a resolution plan with the IRS is not as easy as simply committing to it. In fact, the IRS itself says that half of all agreements default before the term is up. Business owners must enforce upon themselves certain checks to ensure that the company maintains focus and attention on the issue even after the IRS has moved on.
To ensure your business does not run into the IRS again, follow these steps:
- Ensure the budget allows compliance – Setting up a resolution plan is one thing. Staying on it, month-to-month as things come up is another. Keeping a consistent eye on the company's budget is crucial. A business needs to be sure that the IRS resolution set in place can be maintained and that by maintaining it, other (equally important) bills don't go unpaid. A taxpayer should immediately contact the IRS if the plan that was set up needs to be reevaluated. There are circumstances under which an existing resolution can be renegotiated.
- Consider professional help with compliance – Despite the need for the owner of a company to be intimately involved with the functions of maintaining compliance, asking that person to do it themselves is not usually best practice. As a result, the business should be evaluating options for involving parties that can have the resources and systems in place to ensure that the company remains compliant. This is critical part to the company returning to normal.
- Monitor compliance – Assumptions are part of what helps lead a business into tax problems. Regardless of whether an owner chooses to enroll professional assistance, business owners must stay abreast of obligations being met. Owners should schedule regular time (even if brief) as often as the company's payroll frequency, to review every aspect of payroll being met. Also, by remaining in regular contact with the IRS and by consistently reviewing IRS transcripts, a company can be sure that no further taxes accrue and that no returns go unfiled, even by mistake.
- Open all mail and actually read it – Now that a resolution is in place and I'm monitoring my business' compliance, there's no need for me to worry about IRS mail, right? Wrong. There are many reasons that the IRS may be sending mailing notices. Perhaps a payment returned, maybe the IRS is proposing a tax change or it has no record of receiving a return or payment. By consistently reviewing any and all mail by the IRS a taxpayer can rest assured that potential problems can be resolved before they become actual problems.
The IRS considers a business employment tax liability an issue of grave importance. For taxpayers that eventually reach a resolution to the issue, it is just as important to maintain it. Efforts at sustaining the plan should be incorporated by the business as a best practice moving forward.
About the Author
David F. Miles, E.A. is a Vice President at 20/20 Tax Resolution, Inc. with over 18 years of tax resolution experience. He holds a Bachelor's Degree in Political Science from the University of Vermont. Miles is an active educator of other tax professionals on a national level and served as an instructor at the 2011 – 2015 NTPI conferences. He has been interviewed relating to a range of tax topics for various news articles as well as television, was a panelist on Tax Talk Today in November of 2012 and is a regular contributor to the EA Journal.