Whether you are in a clothing store, a restaurant or any other retail business your total bill will include a sales/use tax. This sales tax is money that the business is required to collect and then send on to the state. Depending upon the state in question that money may be used to fund education, road construction, or any number of other needed services within the state.
Unfortunately due to the economic crisis many businesses are using the sales/use tax money to assist them with operating expenses instead of sending it to the state as required. The business then finds itself with delinquent sales taxes and subject to fines, penalties, interest and in some states even the forfeiture of their business.
The state of Michigan takes delinquent sales taxes very seriously. The collection methods they use are very similar to the Federal Governments collection for IRS taxes. Many states find themselves facing extremely high delinquent sales taxes owed and are following suit.
Some of the methods used to collect these delinquent sales taxes include issuing a Bank levy. This means freezing your business’s assets to pay the taxes owed. They may issue a Tax Warrant. This gives them the authority to close your business and sell all property in an effort to collect the amount owed.
Some states require that businesses renew their licenses every year, while others are every 5 or 7 years. Many states are now enacting laws that will prevent businesses from renewing these licenses until all delinquent sales taxes are paid in full. In essence closing you down until you pay!
Similar to the Federal Government laws, some states are using Corporate Officer Liability rules. In essence this allows the state to hold individuals personally liable for the past due taxes. These individuals include but are not limited to, the owner of the business, any person with the authority to control company expenditures.
States can no longer afford to allow businesses to fall delinquent on their sales taxes. Many are enacting very serious penalties, fines and collection activities in order to recoup these monies owed. The economy is wreaking havoc on individuals, businesses and government. When the state fails to receive the money needed to run programs everyone suffers.
Virtually every state will charge you interest and penalties on delinquent sales taxes, these fines add up quickly and can literally double or triple your original debt. It is very important that you contact a tax professional as soon as you realize that you are unable to meet your sales tax burden.
You can work out an installment plan or have your tax professional go through other options that may be available to you depending upon the state in which you reside. Often times the tax professional can contact the state on your behalf and assist you in finding a suitable arrangement to pay your delinquent sales taxes. The simple fact is that you must act swiftly! Do not allow any more time to pass before you contact a tax professional and the state that you owe the taxes. Hesitation can end up costing you a staggeringly huge amount, way more than you originally owed!