Entrepreneurs have a lot in common: drive, ambition, creativity and--many times--tax debt. Tax laws are complicated for everyone, and doubly so for enterprising business owners. There are countless ways to get in trouble. But don't panic--there are also several ways to get out of trouble and resolve your tax debt.

The longer you wait to resolve a debt, the more interest and penalties the IRS will tack on. So even if you don't have the money to fully pay your tax bill, you need to take action. Call the IRS and find out the full extent of the debt. Don't be afraid to check the math and question the totals. Simple mistakes on a tax return can result in big tax bills.

Once you've verified that your tax debt is legitimate, and you agree on the amount owed, it's time to consider your options. The option you select depends on your financial situation.

1. Fully pay. This may seem obvious, but the easiest way to resolve an IRS debt is simply to pay it in full. Consider selling a rarely used car or recreational vehicle in order to satisfy the IRS. While this is inconvenient and unpleasant, consider the alternative: IRS collections hounding you day and night, putting liens and levies on everything you own. Doing without a luxury item sounds a lot more appealing, don't you think?
    
2. Offer in compromise. If you can't pay off your entire tax debt, you might qualify for an offer in compromise (resolving the entire debt for less than is owed). Why would the IRS accept less than what is owed? Well, think of it the way a business owner might: Collection activities cost money. If you can get a lump-sum payment for as much as you can ever hope to collect, even if it's less than the total, there is a benefit in cutting your losses. While this is an excellent way to resolve a tax debt without destroying your finances, it is very difficult to qualify.
    
3. Installment agreement. For those who can't afford to write a single check to pay off their IRS debt, a monthly payment may be your best option. Just like any other debt, paying it off slowly over time is often the most realistic option. Many are surprised to find that the IRS will use its own computation of how much the monthly payment will be. This figure is based on your income less your "allowable expenses." These are limited to necessary living expenses, such as food, housing, transportation, child care, etc. This can result in a high monthly payment.
    
4. Streamlined installment agreement. This type of resolution is still in the form of a monthly payment, but it's designed for taxpayers with recent tax liabilities that are $25,000 or less. Instead of basing the amount of the monthly payment upon your ability to pay, it's based upon the amount needed to pay off the tax debt in five years or less. This form of resolution is less intrusive than a regular installment agreement because it does not involve an extensive financial disclosure of income vs. expenses.
    
5. Currently not collectible. If all your income goes to cover the most basic of living expenses, you may be eligible for placement on "currently not collectible" status. This means that the IRS will back off, stopping all collection activity while allowing the statute of limitations to keep running. The idea is that the IRS won't have to waste resources trying to collect from you until your financial circumstances change or your debt expires.
    
6. Just wait. Tax debts expire 10 years from the date of assessment. So if you have a particularly old debt, you may be able to sit tight until the debt expires. But don't assume your debt is expiring just because it's older. The IRS has ways to alter the date of assessment or lengthen the statute of limitations. I've heard reports of the IRS pressuring taxpayers into signing documents lengthening the statute of limitations as a precondition for entering into a resolution. To protect yourself, you should always request a full record of your tax account, including debt expiration dates.

If you're having trouble getting information and navigating the bureaucracy, contact the Taxpayer Advocate Service, an independent agency within the IRS formed to protect individual and business taxpayer rights and to reduce taxpayer burden. Relatively simple matters can usually be resolved with the advocate's help. Alternatively, you can always contact a tax attorney to help guide you through the murky waters of the IRS.