As a business owner with major tax debt, your installment agreement may be all that stands between you and aggressive action from the IRS. As such, an inability to pay installments will naturally stress you out.
If you’ve sought a temporary solution to help you get back on track, the possibility of an emergency business loan may have crossed your mind. Could this approach actually help? Read on to find out:
If you were one of the lucky businesses to qualify for the Paycheck Protection Program, you’ll have received valuable funds to assist with payroll. Unfortunately, applicable uses of these funds are limited. If you’re dealing with debt, however, you’re in luck: the IRS cites “interest payments on…debt obligations that were incurred before February 15, 2020” as an eligible use of PPP money.
Economic Injury Disaster Loans (EIDL) are a popular alternative to the PPP. Unfortunately, while millions of businesses have qualified in 2020, many entrepreneurs have no idea how to use these funds. Debt can be especially complicated, as the EIDL allows recipients to tackle some obligations but not others. Fortunately, IRS debt is explicitly highlighted as one of the eligible options.
Alternatives to Paying Installments with Loans
While emergency loans can technically be used to cover tax debt, this approach is rarely ideal. As a struggling business owner, you likely have many other obligations that could be handled with these essential funds — and the IRS is more flexible than you think. If possible, revise your installment plan before using your emergency loan to cover your next payment.
As you determine how to handle tax debt or what to do with emergency loans, look to the Highland Tax Group for insight. Contact us today to learn more about your options for dealing with IRS installments.