For those late on making tax penalty payments, small business owners can breathe a little easier. The Internal Revenue Service just announced through 2009, it shall extend a grace period granted to small business owners regarding payment of particular tax-shelter penalties.
The original September 30 deadline was quickly approaching while Congress worked towards passing legislation to shield small business owners from some of those tax-shelter penalties. The IRS then took measures to extend the deadline to the end of the year to give Congress time to pass the needed legislation.
Congress has yet to come to an agreement on the terms of the legislation, thereby holding up the passage of the legislation.
However, in an attempt to find a resolution to this problem, any efforts to collect these penalties will be temporarily suspended by the IRS, thereby allowing many small business owners to breathe a little easier.
Temporary Suspension of Collection Efforts Helpful to Small Business Owners
Efforts to collect any tax penalties will be suspended until December 31, 2009, at which time Congress should have the necessary legislation passed, provided they can work through a bipartisan bill in that period of time.
Many committees through the House and Senate have already indicated that they plan to pass legislation that will protect small business owners, and now it’s just a matter of time. In the meantime, small business owners can get a bit of relief, even if only temporary, until Congress can come together to shield them from some of the penalties imposed by the IRS.
The tax shelter penalties in question involve “listed” transactions. For example, many small business owners bought employment retirement plans that were listed by the IRS. These plans would cost small business owners thousands of dollars in penalties, which they contend are unfair.
Although the IRS has not suspended all collection efforts regarding these listed transactions, they are suspending it for businesses that received a tax benefit of less than $200,000, or $100,000 for individuals.
