Welcome to Just Answer. I am here to help you resolve your tax and finance concerns. Please feel free to ask anytime you need extra help.
Sales tax arrears are one of the most difficult things to put behind us. They originate from using money collected for the state (in this case sales tax) for the operation of the business. To begin getting this behind you the following path should be considered:
One of you should get a job outside the business. The funds earned at that employment (after tax withholdings) should be used to make payments to the tax arrears. After a few months of continuing good faith payments the state will be willing to work out a payment plan. During this time all sales taxes collected should be placed into a bank account annotated as existing for sales taxes. This will remove the money from business operations and, if carefully maintained and honored, will further serve as evidence to the state that you are trying to do the right thing. You may even then be able to make an offer in compromise with the state. An Offer in Compromise (OIC) enables you to settle the debt for a reduced value. This value will probably be for the original amount of tax due and will then save the added interest and penalties costs.
I know this will be a difficult thing since you will be stretched for time but it is the best way to move forward to get out of the hole you are in. Remember that sales taxes are also capable of being declared a personal responsibility and the state can come after you personally.
As to the IRS, if the audits resulted in no change to returns they will not likely be back for some time. If they did make changes and additional tax was due they very likely may be back. If you do not presently have professional representation I recommend that such be obtained. IT can be well worth the money spent.
Here is a short statement from Michigan about OIC's:
As you can see, the likelihood is that the best you can expect is a reduction of the penalty portion of the debt. That is why professional representation is needed to get you through this and is also why I recommended the other portions of my remarks.
Here is link to the state's web page on sales taxes:
I figured that would be the result. No they didFind that we owed additional tax and everythingTurned out fine. Although we had to appeal Their first decision. As I failed to mention thereAre 2 separate business and we each run oneWith little or no pay (me not paid). Husband Very little. Just enough to pay house bills. Can we close the business and still try to negotiateWith payments. What do you recommendBusiness are under desperate companies So they are not linked together