Today TaxMama hears from Dunn in Ohio, with this concern. “I owe federal taxes from when I was working for my employer. I have just started my own business (LLC). Will the IRS take the money I earn from my LLC to pay the personal taxes I owe?”
Anytime you owe money to IRS, they are going to do their best to collect from any possible source.
However, they will not simply come to your business and take away the money you receive – unless you’ve already ignored all their attempts to collect. If you ignore their series of collections letters, one of the last letters is Notice of Intent to Levy. That letter gives you a few last days to address the problem and contact IRS.
Regardless of where you are in the cycle, if you set yourself up on a payment plan, however small the payments are that you can afford, in general IRS will leave you alone. That is, as long as you make the monthly payments.
As your business starts to make a profit, you will need to make quarterly estimated tax payments to cover your tax liability for the year. If you overpay the estimates and end up with a refund for the year, IRS will take that and apply to the old debt.
Other than that, if you’re making the monthly payments on the installment agreement faithfully, you probably don’t need to worry at all!
And remember, you can find answers to all kinds of questions about owing IRS and other tax issues, free. Where? Where else? At TaxMama.com
- Ask TaxMama :: Where taxes are fun and answers are free
- www.TaxQuips.com :: The number ONE free tax podcast online
- IRS Form 9465 :: Installment Agreement Request