Depending on thestructure of the business you run, your U.S. income tax return will be due onMarch 15 or April 15, 2020, unless you file for a six-month extension. However,if September 16 or October 15 rolls around and the IRS hasn’t heard from you, youwill receive a Notice CP515B in the mail.
WhatIs A Notice CP515B?
When the IRSbelieves that your business owes taxes and you have not filed your return bythe due date, it will send you a Notice CP515B requesting that you file thereturn immediately and complete a response form to indicate whether you’vealready filed your return or why you don’t believe you have to file one. If youdon’t respond, the IRS may reach its own decision on how much your businessowes and apply interests and penalties that accrue until you pay.
If you can’t affordto pay your 2019 taxes when they come due, it’s important to send your returnanyway, as the penalties for filing late are more severe than those for overduepayments. If you run a sole proprietorship, the late filing penalty is 5% ofthe balance owing for each month or portion of a month that your return isoverdue, up to a maximum of 25% of the unpaid tax.
Other businessentities face the following penalties:
- Partnerships, S Corporations, and LLCs: If yourun a partnership, S corporation, or LLC that is classified as a partnershipfor taxation purposes, you are penalized $195 a month per managing member for a maximumof 12 months. S corporations receive an additional penalty of ½ of1% on the unpaid tax for each month that the return is overdue.
- C-Corporations and LLCs: Like soleproprietorships, c-corporations and LLCs that elect corporate status for taxpurposes are assessed a penalty equal to 5% of the unpaid balance per month orportion of a month, up to 25% of the amount owing. They alsoreceive the ½ of 1% penalty that is levied on S-corporations for each month thereturn remains unfiled.
WhatIf You Can’t Pay Your Business Taxes?
Even if you can’tpay your 2019 business taxes, file the return right away, as the IRS won’tentertain a payment agreement until you’re in filing and payment compliance.Depending on your circumstances, you may be able to address your tax debt viaone of the following forms of relief:
- In-business Trust Fund Express Installment Agreement: If your business tax debt is $25,000 or less, you can apply for an in-business trust fund express installment agreement,which you pay what you owe over 24 months. If the debt is higher, you can applyfor this agreement after you have gotten the balance down to $25,000.
- Streamlined Installment Agreement: You mayqualify for a Streamlined Installment Agreement if the business owes $25,000 orless and can pay it over six years or before the debt becomes legallyuncollectible.
- Other Payment Plan: If your business owes morethan $25,000 and is ineligible for or can’t sustain a Streamlined InstallmentAgreement, a monthly payment plan may still be approved, but the IRS willrequire full financial disclosure from you. If payroll or excise taxes areinvolved, it will assign a revenue officer to your case to determine whether itshould assess any trust fund taxes.
- Offer in Compromise: You may be able topropose an offer in compromise if your business owes morethan it can reasonably repay. The IRS will look at the company’s reasonablecollection potential, or what it could hope to collect given the company’sfinances and assets. If your offer in compromise is equal to or more than thisreasonable collection potential, it has a good chance of being accepted.
Speakwith a New Jersey Tax Debt Attorney
It can becomplicated for a business to qualify for tax relief, but with representation andguidance from a seasoned tax debt attorney, you can achieve a fair andsustainable resolution of your case. Attorney Brad Paladini holds a Master of Lawsin Taxation and has dedicated his practice to helping individuals andbusinesses overcome their IRS challenges with minimum financial loss. Toschedule a consultation, please call 201-381-4472 or complete our onlineform.
