Businesses can find themselves with Internal Revenue Service (IRS) tax debt they can’t afford, just like individual taxpayers. A sudden emergency or other unexpected change in your life or business can cause you to miss payments or deposits, accruing penalties and interest, creating a substantial debt. There are options if you can’t afford to pay the full debt. It’s important that you know the IRS payment plan options for Florida small business owners.
The Basics of a Payment Plan
If you owe the IRS a debt, the agency generally expects you to repay it. If you can’t pay the full amount in a lump sum, you could pay the full amount over a longer period of time through a payment plan. An installment agreement is one type of payment plan offered by the IRS.
While you pay off your debt, it still gains interest and any relevant penalties. However, it can be beneficial for many reasons. By paying back your tax liability this way, you can limit the collection actions the agency takes against you, such as levies of your assets or a garnishment of your income. You can also remain in better standing with the IRS.
In fiscal year 2024, there were 3.4 million new installment agreements established, and over 4 million existing in the IRS’s inventory. The agency collected $16.1 billion in installment agreement payments, and 1.9 million taxpayers finished paying off their installment agreements.
Long-Term Installment Agreement for Businesses
There are two types of payment plans: short-term and long-term. While individuals can apply for a short-term payment plan, businesses cannot.
Businesses can apply for a long-term payment plan, which is an installment agreement. Most businesses will qualify for a simple long-term payment plan. To qualify, you must be current with your tax filing and payment requirements. One of the following must apply as a business to secure a simple payment plan:
- You have trust fund taxes and $25,000 or less in tax debt, which includes penalties, interests, and your principal assessed taxes
- You have trust fund taxes, are an out-of-business sole proprietorship, and you have $50,000 or less in tax debt
- You don’t have trust fund taxes and less than $50,000 in tax debt
These payment plans may require a business to pay off the debt in monthly installments in 24 months or less, or they may only require the debt to be paid off before the 10-year collection statute expiration date (CSED).
If you don’t qualify for a simple installment agreement, there may still be installment agreement options. You may have to provide information to the IRS, like a Notice of Final Tax Lien determination and a Collection Information Statement, in order to get approval for the agreement.
Businesses are likely not able to apply for installment agreements online. Instead, you have to either call the IRS’s business number or go to one of its Taxpayer Assistance Center (TAC) offices. There are 18 TAC offices in Florida, including in Jacksonville, Melbourne, and Fort Lauderdale.
Partial Payment Installment Agreement
If you cannot pay the full amount of your debt even within the 10-year CSED, then you could enter into a partial payment installment agreement. Applying for this requires additional information, including the Collection Information Statement.
A partial payment agreement, if the IRS grants it, will be reviewed every two years. This review determines if your financial situation still requires the same agreement, if the monthly amount you are paying should be increased or decreased, or if you can pay your debt another way.
FAQs About IRS Payment Plan Options for Florida Small Business Owners
Does the IRS Allow Payment Plans for Businesses?
Yes, the IRS allows payment plans for businesses. An installment agreement might be possible for businesses with under $25,000 in taxes, penalties, and interest. This limit can increase to up to $50,000 if there are no trust fund taxes or if the company is an out-of-business sole proprietorship. If you don’t qualify for this simple installment agreement, you may also be able to file for a partial payment plan with supporting financial information.
How Do You Pay Small Business Taxes in Florida?
You pay small business taxes in Florida by filing your required taxes with the Florida Department of Revenue and with the IRS. This includes state reemployment taxes, corporate income taxes, property taxes, sales and use taxes, and more. You can file your taxes online for both state and federal taxes.
What Is the Minimum the IRS Will Accept for a Payment Plan?
The minimum the IRS will accept for a payment plan is generally any amount you can pay. Taxpayers typically have up to 10 years to pay off a tax debt, although interest and penalties will accrue during that time. The IRS may also take collection action to recover the debt. When you hire a Miami IRS tax attorney, they can help you determine if a payment plan is a useful way to address your tax debt.
What Are the IRS Payment Plan Options?
The IRS has two main payment plan options: a short-term payment plan made in 180 days or less, and a long-term payment plan called an installment agreement. Short-term payment plans are generally not available to businesses. Businesses also have up to 24 months to complete an installment agreement, while individuals have up to 72 months. Both individuals and businesses have the option to enter into simple long-term payment plans, which require less information.
Hire a Tax Attorney at TaxSmith, LLC
An installment agreement may not always be the right way to resolve your business’s tax debt. When you work with the attorneys at TaxSmith, LLC, we can assess your unique financial circumstances. You might be able to resolve or lower your business’s tax debt through penalty abatement or an offer in compromise. Our attorneys can even help you assess the benefits and drawbacks of bankruptcy.
If an installment agreement is the right method for your business, our team can help you negotiate an ideal result with the IRS. We can represent you when you go to discuss your tax debt at one of the IRS TAC offices in Florida.
It’s important to act quickly. The longer you wait, the more penalties and interest accrue on your debt. Get in touch with TaxSmith, LLC, today and learn how we can help you.
