The pandemic continues to wreak havoc on a multitude of industries, fields, and businesses. Many closely held businesses struggle to meet current financial obligations, whether payroll, payroll taxes, lease obligations, supplier accounts, or vendor invoices. Businesses need more than stopgap measures. They need sound strategies.
Here are a few things that wise business leaders do. First, account for all current obligations and ongoing expenses. Know where you stand at all times. Second, take control. Recognize the extent of the current situation and then pursue the best options. The decisions may be difficult, like suspending development programs or furloughing employees, but it is essential to make those hard decisions when necessary.
Third, prioritize and pay primary obligations. Yes, retain and compensate critical staff, but above all, address IRS payroll obligations, the avoidance of which may lead to criminal charges and personal liability. Know the consequences of delinquency on each current obligation, and use those consequences to prioritize which to pay, suspend, or negotiate.
When evaluating IRS debt, contract commitments, and other obligations, one of the best things you can do is seek wise legal counsel. Lawyers experienced in business failures and workouts know the options and outcomes. Don't wait until it's too late. Get advice while you still have options.
For example, at the pandemic's March 2020 onset, the IRS adopted a People First Initiative that suspended certain liens and levies. The IRS also considers taxpayer requests to release existing liens because of economic hardship so that the taxpayer can liquidate assets to pay other obligations. Tax counsel can assist in gaining such relief.
Here are a few things not to do. First, do not ignore debts. Sticking one's head in the sand is not an option. Second, do not procrastinate. When the situation demands hard action, act. Don't wait for a miracle rescue. Do what you can do now. And one last thing not to do: fall for an IRS-stimulus scam. Consult expert counsel before committing to uncertain courses.
Frazer Ryan Goldberg & Arnold LLP is a nationally recognized law firm organized in service-specific lawyer teams that exceed the high expectations of closely held businesses. Call Senior Partner, Tax Controversy Attorney, Brandon A. Keim at (602) 200-7399 to consult on COVID-related tax issues and other financial and legal problems. Our lawyers design solutions.