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What Happens if a Business Does Not Pay Taxes?

08th April 2010
By tb_chats in Business Law
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Paying taxes is unpleasant but of course necessary, and this means individuals as well as businesses. Reporting taxes is something that most businesses take very seriously, and some have entire accounting departments or individuals whose job it is to record, report and pay the proper taxes as they're due.

Of course just because paying taxes is a legal obligation, this does not mean that it always gets done properly and on a timely basis. Some companies commit outright fraud in hiding assets or underreporting taxes, whereas others experience difficult economic times and put off paying their taxes because they simply do not have the funds.

What happens if a business does this? The answer will vary according to the actions of the business. For some they may be able to work out arrangements with the IRS and state in order to pay taxes over time, just as an individual may be able to do. In some cases the government may put a lien on the property of the business or seize assets. In rare cases the owners of the business may face criminal charges because of nonpayment, if it's believed their actions were deliberate. Of course that business owner has the right to defend himself or herself in these cases.

There is no easy answer of what happens when a business or individual does not pay taxes. Typically the government is very cooperative in working out payment arrangements for these ones, although there may be late fees and interest charged on top of the monies owed. Typically it's only in very deliberate cases of outright fraud will someone face potential criminal charges, however, in all cases it's good for a business owner to consult with an attorney or tax advisor to be sure the are protecting their own interests and the interests of the business overall.

No information in this article should be considered as legal advice. Always consult with an attorney on all legal matters.

Visit to learn more from Ned Kimmelman, PC of Boca Raton, FL.
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