Entrepreneurs are required to file reports and pay taxes, and failure to file/pay timely may result in penalties and interest. If you fail to file or pay timely and have good cause, you can request a waiver of the penalty. Events such as a hurricane, flood, or fire are generally situations where agencies will extend grace.
If the amount you owe is more than you can pay immediately, you can request an installment agreement. Failing to adhere to the requirements of the installment agreement may mean that the full balance is immediately due and collection action may occur without notice.
The first collection step is to place a lien on your property. If after the lien is placed the tax is not paid, the agency may file a levy requiring your bank to forward funds to the tax agency to satisfy the debt. If money is not available in the bank account to clear the debt, a warrant to seize assets may be served to the business. If the value of the property is not enough to satisfy the debt due, a garnishment of wages from future employment may occur.
If you feel the assessment is in error, you may be able to contact the agency to speak with a tax advocate to go through the information and assist with a request to reduce the tax due. A tax advocate is there to review the facts and ensure your rights have been protected. They also help with resolving the tax issue at hand.
Of course it’s better to stay in compliance by filing returns and paying tax timely. But if for some reason you find yourself in the situation where penalties and interest are due, make sure you are aware of your rights and get help to resolve your issue.