Each year there is a substantial issue to be addressed for those businesses that owe taxes to state and federal agencies. Although companies are usually given notice of their tax debt obligations, there are some who simply cannot afford to pay these taxes at the end of the year. In California, the State Tax Board has made a list of the top 500 businesses that owe the most taxes. However, many questions have been raised about the effectiveness of this collection effort.

In 2007, the board began publicizing those who failed to make their tax payments each year. To be put on this list, the business must have been notified of its tax debt at least seven times and it must owe over $100,000 in tax debt. State officials have stated that this process is used in a way to motivate these businesses to pay.

However, despite the board’s intent, many individuals believe that shaming a business into making payments that they do not have the means to make can be counterproductive. Besides compiling the delinquent list, state agencies also have the ability to suspend professional licenses. Also, it was noted that the state will further their efforts to collect back taxes in the future by conducting research into business bank accounts.

Tax debt in California has become a serious issue for many businesses. Although the debt may seem insurmountable at times, there may be a way to resolve the issue by taking proactive measures to show a willingness to pay. These measure may allow a business to stay afloat while appeasing tax authorities by showing a concerted effort to try and reach a resolution of their financial obligations to the government. Other times, there may well be a dispute concerning the amount of money claimed due, and the right advice may help confront these issues in a manner that is both responsible and protects business interests.

Source: California Watch, “Tax debtors owe state billions but rarely face sanctions,” Matt Drange, Oct. 16, 2012