Every year, the IRS and State of New Jersey relentlessly pursue back taxes, and often, small business owners find themselves under the agency’s scrutiny. But why do business owners become prime targets for IRS back tax enforcement and State of New Jersey back tax enforcement? Let’s explore the key reasons behind this prioritization.

1. Enormous Back Tax Balances:

A US Treasury study reveals a surprising fact – 85% of individuals owing back taxes are W-2 earners with debts less than $25,000. In stark contrast, a common scenario for business owners involves much larger outstanding balances, often exceeding $100,000. Despite earning well “on paper,” many business owners struggle to maintain the cash flow necessary to meet their tax obligations. The IRS knows that , naturally, prioritizes the collection of these substantial amounts of back taxes.

2. Unfiled Tax Returns Over Several Years:

Disorganization often plagues business owners, leading to the neglect of filing tax returns. Unlike not paying taxes, the IRS and the State of New Jersey consider not filing to be a serious offense. When a business owner, apparently successful on paper, fails to file taxes regularly, it attracts heightened scrutiny. The IRS views this neglect as a substantial violation, further intensifying the agency’s focus on these individuals as well as asking for criminal penalties. The State of New Jersey has actually been pursuing the failure to file tax returns with criminal charges. An intentional failure to tax returns is actually a felony.

3. More Assets at Stake:

The majority (85%) of those owing less than $25,000 in back taxes likely possess few, if any, substantial assets. On the contrary, business owners, even with significant back tax balances, usually have assets like homes, business tools, and accounts receivable. The IRS and New Jersey State in its pursuit of collections, prioritizes individuals with substantial assets that can potentially be liquidated to settle back tax balances.

Especially as IRS enforcement has escalated in 2024 and beyond, business owners employing a passive “hope they don’t catch me” strategy find themselves facing severe consequences. Taking proactive steps to address back tax issues is essential for those aiming to move forward without the looming threat of IRS intervention.

If you find yourself entangled in back tax challenges, taking swift action is paramount. A free assessment call with us (732-333-0681) provides an opportunity to connect with a licensed tax professional who can assess your situation and recommend effective strategies for resolution.

As the IRS continues to target back tax issues, small business owners need to recognize the urgency of addressing these challenges. The proactive approach allows more options for the business owner as opposed to having the IRS control how payment will be obtained. . Those who take decisive steps now can pave the way for a more secure financial future, as well as be able to focus more on their business to grow it, rather than the stress of dealing with back taxes and the looming fear that the IRS or the State of New Jersey will notify their customers to levy the fees or worse padlock and shut down this business.

If you want to put this behind you, contact the tax resolution professionals at Tomes Law Firm today at 732-333-0681 today.