How I Sweet-Talked the IRS

Entrepreneurs try to keep the Internal Revenue Service at a comfy distance. But when your business is in hot water, it's time to get real friendly.

Eleven years ago I discovered this the hard way when I took over as president of a small Philadelphia based multimedia company.

After a month and several calls from irate suppliers, the bookkeeper informed me that my predecessor had kept two sets of books -- one for banks and investors and a second with the real facts -- which revealed that we owed 63 vendors a total of $500,000.

Worse, we owed the government $20,000 for past employee taxes, $10,000 in quarterly income taxes to Pennsylvania and almost $50,000 to the federal government for quarterly income taxes.

The vendors, who had no legal claims on our assets, could only take us to court. My most immediate concern was the IRS.

Don't Wait for the Letter

So how do you tell the IRS your business hasn't paid its taxes in two quarters?

As preemptively as possible.

Most wait by the mailbox and hope that warning letter never arrives.

I jumped in my car and drove 20 minutes to the local IRS office.

The shocked receptionist, who had worked there over a decade, told me nobody had ever come forward without being summoned.