Your failure to pay employment taxes has come back to haunt you. Whether you’re currently facing tax debt, a tax lien, or criminal proceedings, you’re worried about the future of your business.
Like many business owners facing tax issues, you’ve thought more than once about closing your company for good. Is this a realistic solution? Keep reading to find out:
Closing Your Business: More Complicated Than You Think
If only shuttering your business meant a prompt end to your tax problems. Sadly, this approach can be just as complicated as dealing with current tax issues. You’ll still need to file quarterly tax reports, along with a variety of other documents. The official IRS checklist for closing your business includes:
- Completing final deposits for your federal taxes
- Filing final quarterly tax forms
- Issuing final withholding reports
- Filing final information on tip allocation
- Reporting shares for partners and shareholders
- Reporting information about capital gains and losses
- Filing an asset acquisition statement
IRS Collection Action May Not End
Company closure doesn’t necessarily halt IRS collection proceedings. In cases involving payroll taxes, the IRS ‘pierces the veil,’ or holds responsible individuals accountable. As business owner, you may remain liable for tax debt long after your company folds. Don’t look to chapter 7 for relief; while bankruptcy can discharge some debts via business liquidation, it won’t discharge FICA taxes or government liens.
Is Business Closure Ever the Right Approach?
Don’t assume that closing your business is the easy way out. In some cases, however, it helps to start fresh, especially if tax issues have damaged your company’s reputation. Impending business closure may also make it easier to score an Offer in Compromise, as your situation may suggest doubt as to collectibility. Assess your situation carefully to determine whether business closure might provide the relief you so desperately need.
Should you close your business? How should you handle your imposing IRS tax issues? The team at Highland Tax Group can give you the insight you need to make sound, strategic decisions. Get in touch now at 720-398-6088, or learn more on our site.