Paying the IRS Late is Sometimes a Business Plan

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Paying the IRS Late is Sometimes a Business Plan

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Paying the IRS Late is Sometimes a Business Plan

Obviously, you don't want to pay the IRS late. That is generally always something that is frowned upon due to the negatives that go along with it such as penalties and fees. It doesn't generally seem worth it. But there are some instances in which it actually is a thought out plan that is beneficial, one that was well discussed with a tax professional and the accountants and bookkeepers at the company, because it will save the company in the long run.

Why Would a Business Pay Late?

The short answer, would be because the penalty for paying late is actually less than whatever it is that needed to be done. Consider the costs of insuring all employees due to the Affordable Care Act. That was something that some companies took a hit for. Some took the hit and stated that paying for the insurance and paying late on their taxes, so that they would still have cash on hand was better than being strapped for funds. So they made a decision.

Many felt that paying penalties and interest at the end of the year was still better for them. And this is a strategy that some use, very rarely, when there is a sudden change to the business, such as the new laws that required more money to be put out by the companies. But this isn't the norm, or generally recommended.

Should You Do It?

This literally can't be reiterated enough, it's not something that should be a first solution. This should be considered a last solution, something where you know that you are going to be having funds coming in relatively soon after the filing deadline, where you know you can pay that tax bill, pretty much with a certain guarantee.

It has to be a well thought out strategy, one that is generally only going to benefit the company in the long run. If it's something where you are saying oh it's not going to get paid now, and I don't know when it will than this is not the right decision for you. This probably couldn't be further from best decision. But in order to do this, you cannot be in the arrears with anything and you have to file on time or file an extension. If you don't do that, you won't be able to take this option.

Other Options

There are other options. Again if this is a strategy that you are using and you aren't sure where the funds are coming from, than it's not right. You would be better off sucking up the pride and contacting the IRs to discuss other options. These can include installments payments, which means you will pay off the balance, but not all at once, which will give you a bit of a break.

Again this is not something that you want to bank on, literally. It's an extremely serious move so you want to ensure, and this can't be stressed enough, that you consult with your trusted tax professional first. It should not be taken lightly and really should only be something that you consider in dire cases. Miami CPA

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