What should be done if the business is not able to pay the liability?
You should talk to a competent tax professional who will deal with the IRS for you as you have a number of options available:
a. Uncollectable status?
When you convince the IRS that your operating expenses currently exceed income to the point that you are not in a position to pay at this time, the IRS will delay collection for a number of months. During this time, penalties and interest continue to accrue. More than likely, if you are not able to convince the IRS that you will make a profit in the future, the IRS may come after each officer responsible for withholding, collecting and/or paying over the tax.
b. An installment agreement?
This is when you agree to pay the amount owed in monthly increments. However, interest and penalties may continue to accrue.
c. An Offer in Compromise?
This means the IRS will settle for a portion of what is owed when there appears little likelihood that it will receive funds exceeding the amount offered for a period of years. You must also convince the IRS that an installment agreement would be inappropriate option for your business due to the nature of it.
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