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Options for paying outstanding business taxes

As a business owner in Minnesota, you may find that it is all too easy to fall behind on paying your business taxes, leaving you with an outstanding balance that you have to take care of. 

The first step toward repayment of your outstanding tax balances may be filing a financial statement with the Minnesota Department of Revenue. Along with supporting documentation, MDR uses this information to evaluate your ability to pay back your debt. After MDR makes its determination, there may be repayment options available to you, such as the following. 

Payment agreements 

Both the state Department of Revenue and the Internal Revenue Service may be willing to make an arrangement by which you agree to pay back what you owe a little bit at a time, usually on a monthly basis. Fees, interest and penalties may apply. It is important to hold up your end of the agreement by paying each tax notice on time. 

Bankruptcy 

Depending on the type of bankruptcy you file and the taxes you owe, filing for bankruptcy may allow you to discharge tax debt or reorganize your debt so that it becomes part of a larger repayment plan. 

Compromise 

If you file for bankruptcy, it may discharge your tax debt so that the IRS or MDR end up getting nothing from you. It is more beneficial for them to receive a portion of what you owe. Therefore, they may be open to an offer in compromise, in which you propose, in writing, to pay a tax settlement that is less than the full amount. 

Financial hardship 

If you are able to demonstrate financial hardship, the MDR may reconsider enforced collection actions against you. As a business owner, you can demonstrate financial hardship in the form of payroll checks that you cannot honor. You can provide your business information by filling out Form C58B, available from the MDR. 

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Edina Tax Law Office
Pridgeon & Zoss, PLLC
7301 Ohms Lane, Suite 420
Edina, MN 55439

Telephone: 952-835-8320
Fax: 952-835-0201
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St. Anthony Tax Law Office
Pridgeon & Zoss, PLLC
2812 Anthony Lane South, Suite 200
St. Anthony, Minnesota 55418

Telephone: 612-455-8948
Fax: 612-788-9879
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