Can I settle my tax debt with the IRS if I own my own business?
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Self-employment can be great. No one to answer to but yourself; you are the master of your own domain. But self-employment exposes you to a higher risk of incurring tax liabilities. Without an employer withholding and paying your taxes from each paycheck, you are now responsible for managing your own tax payments to the IRS regularly to keep from owing a big tax bill every April. Income taxes are just the tip of the iceberg for those who are self-employed though. The self-employment tax is an additional 15.3%, double what you pay towards Social Security and Medicare as an employee of someone else’s business. And for those with employees of their own, you are responsible for withholding and remitting your employee’s income and FICA taxes. With all these added responsibilities, the self-employed have to be more vigilant to keep the IRS from looking into their affairs.
So what happens if you are self-employed and the IRS is after you for unpaid taxes or because you have been assessed a penalty for failing to pay over taxes you withheld from your employees? Is the offer in compromise option still available to you? Will you have to close the doors to your business? The offer in compromise is available to anyone without the means to pay the amount they owe. When it comes to submitting an offer in compromise, it doesn’t matter how you make your money, it just matters how much money you make. You will not be required to shut down your business. However, the continuing operation of your business may affect whether or not the IRS will accept your offer.
Offers submitted for self-employed individuals usually take longer to be processed. All these offers eventually get channeled to a specific division just for offers submitted for self-employed taxpayers. The IRS is typically a lot more cautious when reviewing these offers and typically require more substantiating documentation. An acceptable offer in compromise is very detail oriented and even more so if you are self-employed. Having someone who knows the offer system to prepare and submit your offer will make a world of difference in getting your offer accepted and getting you a fresh start. We have experience in submitting, and getting offers accepted, for self-employed taxpayers. If the IRS is collecting against you, call us for a free consultation to discuss your options.
