Tax arrears occur when you owe the IRD money due to unpaid taxes. When you have missed tax payments, the IRD can recover this money directly from your bank account or pay, freeze your assets and liquidate your business. Tax arrears are a scary and serious situation, and one that no business owner wants to find themselves in.
Despite the severity of being in tax arrears, it is a surprisingly common scenario. In our vast experience, we have found that the great majority of people owing money to the IRD are not dodging tax, rather they have gotten to this point either by mistake, unexpected circumstances or poor accounting advice.
The following scenarios outline just how easy it is to accidentally find oneself in tax arrears:
Scenario One: Family Business Confusion
Mr. and Mrs. Smith thought they were tracking everything in their family business properly but ended up with a tax bill far higher than they had expected, forcing them into tax arrears.
Scenario Two: Cash Flow Problems
Joanne had an unexpected decrease in cash flow. She suddenly found herself with a tax bill that she couldn’t pay.
Scenario Three: Tax Audit
Operating on his accountant’s advice, Robert thought he was doing everything right, but a tax audit proved otherwise. He ended up owing a whole heap of backdated taxes to the IRD – which he couldn’t afford.
The Challenge with Tax Arrears
The real challenge with tax arrears isn’t that you owe the IRD money, it’s the way the situation rapidly escalates. If it was as simple as a missed payment that you could afford, it wouldn’t be a huge problem – but what often happens is that between late penalties, interest charges and a lack of cash flow, your tax arrears situation quickly gets out of control.
Without expert advice and support from qualified tax lawyers and accountants, business owners and individuals can find themselves facing legal action, bankruptcy and a mountain of fees.
Tax Debt Sorted NZ Can Help
At the end of the day, the IRD doesn’t want your business to go under, they simply want to collect the unpaid tax money that you owe the government. To you, the situation is personal and it can feel like the IRD is breathing down your back; the team at Tax Debt Sorted NZ are not only experienced with the IRD but we are also able to remain calm and objective.
It is from this position that we can halt any tax debt interest accruing while negotiating either a repayment plan or even a tax write-off on your behalf. We will get the best possible solution to get you out of tax arrears and back on your feet.