Important Tax Considerations for New Jersey Businesses Closing Their Doors in 2022Offshore Account Update
Posted on August 12, 2022 | Share
If your business has recently closed its doors for good, you are not alone. While the Paycheck Protection Program (PPP) and other pandemic relief programs offered short-term lifelines for many businesses, this often proved not to be enough. From soaring inflation to the unbalanced labor market, a variety of factors have come together to create an extremely challenging business environment in 2022.
When winding down a business, there are several important considerations to keep in mind—including several considerations related to federal income tax liability. Just because your business is closed, this does not necessarily mean that you are done dealing with the Internal Revenue Service (IRS).
IRS: What Business Owners Need to Do When Closing Their Doors for Good
Recognizing that 2022 has been a difficult year for many business owners, the IRS recently published a Tax Tip titled, What Business Owners Need to Do When Closing Their Doors for Good. In its Tax Tip, the IRS advises that business owners should take several steps to ensure that they do not encounter issues down the line. These steps include:
- Submitting a final income tax filing and payment
- Submitting final employment tax reports and payments
- Reporting payments made to independent contractors (in excess of $600)
- Canceling their employer identification number (EIN) and closing their IRS business account
- Storing the business’s financial and tax records in case they are needed in the future
These are all important steps, and business owners should take them if they can. But what if you are closing your business and you aren’t able to meet your federal income and employment tax obligations?
What Business Owners Should Do if They Can’t Pay What They Owe
From paying their employees to simply trying to stay above water, struggling business owners often use funds they should use to pay the IRS for other purposes. If you find yourself in this situation and you can’t afford to pay what you owe, what options do you have available?
The answer to this question depends on your individual circumstances. Your business’s filing history, why you cannot afford to pay the IRS, and whether you have sought tax relief previously are just a few of several relevant factors. With this in mind, some potential options may include:
- Negotiating a settlement. In some cases, business owners can negotiate their tax debt directly with the IRS.
- Seeking an offer in compromise. Seeking an offer in compromise is another option that many business owners can leverage to secure a payment plan that they can manage over time.
- Submitting a voluntary disclosure. In cases involving intentional tax law violations, submitting a voluntary disclosure can save business owners from unnecessary IRS penalties.
Discuss Your Options with Tax Attorney Kevin E. Thorn in New Jersey
If you need help dealing with the IRS after closing your business in New Jersey, we encourage you to schedule a confidential consultation at Thorn Law Group. To request an appointment with Managing Partner Kevin E. Thorn, please call 201-842-7696, email firstname.lastname@example.org or tell us how we can contact you online today.