Taxing authorities expect payment, but what if there is no money?

Everyone in Illinois knows when tax time is, but it still seems to come up suddenly every year. This is especially true if a small business owes money to taxing authorities. Sometimes, the money is just not available, and a business is left wondering what to do.

For many small business owners, payment of any 2013 taxes and a 2014 estimated payment are due at the same time. If making both of these payments is not possible, the 2013 liability should take priority. The consequences for not paying the current tax year's liability are more than for not making an estimated payment.

Many business owners obtain extensions for filing their tax returns, but that does not mean that payments can be delayed as well. If payments are not made, penalties and interest will accrue on the balance. The sooner payment can be made, the better.

Whether or not a penalty is assessed depends on many factors. If the total obligation is under $1,000 or the business owner can pay 90 percent of the taxed owed on time, a penalty may not be assessed. One area where there is little to no leeway is payroll taxes. These must be paid in order to avoid personal liability.

However, when it comes to income taxes, most taxing authorities provide options to those who are unable to make full payment on April 15. It may be necessary to negotiate with the state and the IRS in order to deal with the taxes the business is having trouble paying. Having knowledge of these options could get an Illinois small business owner back on track.

Source: Fox Business, "Last Minute Tax Tips for Business Owners-What if I Can't Pay All My Taxes?", Bonnie Lee, April 11, 2014

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