The Internal Revenue Service - IRS may collect taxes by imposing a "levy" on your bank account, your car, your business, or just about anything else you own. The "levy" is the process of seizing assets to pay back taxes. The Internal Revenue Service has a number of ways to levy on property. They can order your bank to pay them everything in your accounts. They can seize your car or other property you own and sell it.
Can the IRS take my business?
Yes. Depending on the type of tax and how much is owed, the IRS might want to take your business. They certainly can close down a business, and they have been known to do so.
There are at least three reasons why the IRS might seize a business. The first is to sell the assets and use the money to pay the tax owed. The second is to shut down a business to keep it from running up more tax debts. The third occurs rarely, but does happen occasionally: when a revenue officer becomes vindictive.
If the IRS is threatening to take your business, you should seriously consider speaking to a tax expert.
What types of unpaid taxes might lead the IRS to take my business?
If you operate a business, there are a number of different types of taxes you might owe the Internal Revenue Service. There are ordinary income taxes on the profits from the business. There will also be "self employment" taxes (social security and Medicare taxes for self employed people). If you have employees, there will also be "employee taxes," which require withholding social security, Medicare, and income taxes from the employees' wages. These taxes must be paid every month and tax returns are due four times a year (every quarter). Not paying these taxes gets the IRS very excited, because not only are you not paying the employer part of the taxes, you're not paying the employees' taxes either.
When might the IRS take my business?
If you owe income taxes for one or two years only, it is unlikely that the IRS will close your business. But there are two situations where it is likely that the IRS will shut you down.
The first is if you owe income taxes for a number of years and keep going further into tax debt each year. The IRS then will often shut down the business to "stop the bleeding."
The other situation is where you owe employee taxes that have not been paid. Because you owe both the employer's and the employees' taxes, the Internal Revenue Service is much less lenient than in other situations. It will close down a business that falls more than a few quarters behind on its employee taxes, unless you can show that you will pay off all tax debts within a few months.
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