Specifically for some of our clients, who have been hard hit and located in Southern Oregon, an area of the country with higher than national average unemployment and economic loss. These companies have lost hundreds of thousands of dollars between 2008 and now. During this time, our company and the business owners were not paid and in fact invested hundreds of thousands of dollars to keep the businesses viable and continue to employ almost 100 hundred people.
To make it through this time, our clients found themselves unable to pay the employee withholding taxes in full. However, these companies always filed and communicated thier position to the government each quarter. Each company had a payment history that showed progress through these tough times and how they prioritized their finances. The companies only paid wages and business critical expenses to keep the doors open which allowed them to continue to employ people, they paid all their obligations, albeit late.
We tried for over a year to get a formal payment agreement with the IRS for our clients, however the attitude of I.R.S. employees was one of disgust and uncaring for our clients or the employees. It took the IRS almost a year to get an agreement in place, and only after hiring a professional tax company to represent the firms, did the IRS allow a payment plan to be approved. Further, despite providing case law, IRS regulations and policy and backup information that showed these clients did not with malice or ill intent, not pay their taxes; the IRS has refused to abate penalties, with the final reason given in writing as; “A lack of funds does not amount to reasonable cause for failure to pay taxes”.
It is this inconsistency with regard to the law, IRS’s own rules and government policy that is currently holding many small businesses back. These companies are now in a position to not only get a loan to pay the tax and interest due the US Government, but also get one to make specific capital improvements and increase their business and employ more people. However, they cannot get the loan to do this without an abatement of the penalties.
It is disheartening to small business owners when they see our government give money to big companies and threaten to violate the same “Trust Fund Rules” by saying Social Security will go unpaid. Why would a government have a policy to ignore and punish those who are willing to fairly compensate the government through interest payments and investment in future business?
Our advice to clients is to refrain from growth without certain funding for all aspects of an expansion or new venture. The US Government has declared Small Business a target, with no apparent understanding of the way small business operates or affects the overall economic viability of our communities.