Business Tax Debt Resolution From Licensed Tax Agents in Pasadena, CA
Business tax problems rarely arrive one at a time. A slow quarter turns into a missed deposit, a late return, and a revenue officer asking for financial statements. At Fresh Start Tax Relief Services in Pasadena, our licensed tax agents help owners resolve business tax debt while keeping the company operating. We are a women-owned business with decades of experience dealing with the IRS, and we serve both individuals and businesses.
The Kinds of Business Tax Debt We See
Payroll taxes are the most urgent business tax problem, and our payroll tax and trust fund penalty help page covers them in detail. They are far from the only kind. Businesses also fall behind on:
- Corporate income tax owed by C corporations
- Federal unemployment tax reported on Form 940
- Excise taxes in certain industries
- Penalties for late partnership and S corporation returns
- Business returns that were never filed
Each carries its own rules, penalties, and collection risks. Identifying exactly which taxes and periods are open is the first step toward a resolution the IRS will accept.
Who Is Responsible Depends on the Business Structure
How your business is organized shapes who owes the debt.
Sole Proprietors and Single-Member LLCs
Business income for a sole proprietor flows directly onto the owner's personal return, so income tax debt from the business is personal debt. A single-member LLC is generally treated the same way for income tax, even though it may file its own payroll returns.
Partnerships and S Corporations
These entities generally do not pay income tax themselves. The income passes through to the owners' personal returns. The entity can still owe penalties, including a per-owner, per-month penalty for filing late, which applies for up to 12 months even when no tax is due.
C Corporations
A C corporation owes its own income tax, and that debt generally stays with the corporation. The major exception is unpaid trust fund taxes, which the IRS can assess personally against responsible individuals.
Resolving the Debt While Staying Open
The IRS expects a business to stay current on new tax obligations before it agrees to resolve old ones. Falling further behind while negotiating, often called pyramiding, is one of the fastest ways to lose options. So our first priority is usually stabilizing current deposits and filings.
From there, we pursue the resolution that fits. A business payment plan may work for many balances, and businesses owing $25,000 or less may qualify for a plan of up to 24 months. Larger balances require full financial disclosure and negotiation. A business may also qualify for an Offer in Compromise if it meets certain financial guidelines, and penalty abatement can reduce penalties that have built up.
If the IRS or a state revenue office has already shut the business down, our
business reinstatement help focuses on getting it reopened.
How the IRS Collects From a Business
Larger business balances are often assigned to a revenue officer, who may visit the business and request a detailed financial statement on Form 433-B. The IRS can levy business bank accounts and accounts receivable, which means it can collect directly from your customers' payments. For a business that depends on steady cash flow, that can be devastating.
Serving Pasadena Businesses and Owners Nationwide
We help business owners in Pasadena, Arcadia, Sierra Madre, South Pasadena, and across Los Angeles County. We also work with businesses far beyond the region: "Not only do we service every single county in California, but we service taxpayers nationwide." Learn more about the Tax Superwomen on the Fresh Start Tax Relief home page.
Frequently Asked Questions
Am I personally responsible for my business's tax debt?
It depends on the structure. Sole proprietors are personally liable for business income tax. C corporation income tax generally stays with the corporation, but unpaid trust fund taxes can be assessed personally.
What is pyramiding?
Pyramiding is when a business keeps accruing new tax debt while old debt remains unpaid. The IRS generally expects current filings and deposits before it will agree to resolve older balances.
Can a business qualify for an Offer in Compromise?
Yes. A business that meets certain financial guidelines can submit an offer, supported by a detailed business financial statement.
What can the IRS levy from a business?
The IRS can levy business bank accounts, accounts receivable owed by customers, and other business property to collect unpaid taxes.
Is there a penalty for filing a partnership or S corporation return late?
Yes. A per-owner, per-month penalty applies for up to 12 months, even when the entity owes no tax.