Take the Deal For Unpaid Taxes

Nathan pays a transaction privilege tax to the state of Arizona. He was unable to pay that tax and now has a lien against his home. They're offering a payment plan. Should he take it?

QUESTION: Nathan in Tucson owns a business that does waterfalls. He pays a transaction privilege tax to the state of Arizona. Because he was unable to pay that tax when times were lean, he now has a lien against his home, and his bank account has been cleaned out at least once. They’re offering a payment plan. Should he take it?

ANSWER: That is a good plan. Take the payment plan. When you’re dealing with the Department of Revenue on unpaid sales tax, in this case, or you’re dealing with the IRS on unpaid income taxes, they have—as you have found—tremendous power. You have got to get your business model straightened out to where you are paying those taxes as you go as you’re supposed to and this never happens again. They’ve got the power to completely screw up your whole life and shut you down.

I would take the deal. You’re not making enough profit yet is the problem. You’re having to live out of this thing, and you’re kind of cheating out of those side accounts, in a sense. Not in an immoral way but in an accounting way.