What action is required if a contractor fails to pay their taxes on time?

When a contractor fails to pay their taxes on time, the immediate requirement is to pay penalties associated with the late payment. Tax authorities impose penalties to encourage timely payment and compliance with tax laws. These penalties can accumulate over time, increasing the total financial burden if not addressed swiftly.

In this situation, paying the penalties immediately is crucial because it prevents further complications, such as additional fines or potential legal actions from tax authorities. By addressing the penalties promptly, the contractor can also begin to work on resolving the original tax payment issue without incurring further penalties.

The other actions listed, such as filing for an extension or applying for a tax loan, are generally not applicable to situations where taxes are already overdue. Notifying state authorities might be required under certain circumstances, but the most immediate and responsible action is to focus on paying the penalties to mitigate financial repercussions.