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Back Tax Problem

Owing back taxes to the IRS can lead to a variety of problems. Back tax problems can include everything from having taxpayers’ paycheck garnished to having a levy placed on their properties. In many cases, there are underlying circumstances that lead to having owed back taxes in the first place. The key to coming up with a plan is knowing exactly what circumstances caused taxpayers their tax build up. This will not only will resolve back tax problems but also will prevent from owing subsequent tax balances in the future.

How Do the Problems Occur?

The most common circumstance resulting in taxpayers owing back taxes is the inability to pay off the tax bill in full on time. However, ignoring the situation will result in the IRS adding penalties and interest to the assessed tax, making it even more difficult to pay!

Can Back Taxes be Resolved?

It is possible to resolve the taxpayer back tax problem by working out a payment plan with the IRS as soon as possible to prevent their tax bill from growing larger.

Are there Other Ways to Fall in This Situation?

Another circumstance under which many people end up owing back taxes is the misconception that there is insufficient time available to resolve the tax problem. With the demands of life pressing us from every angle, many people are stressed and assume that they do not have time to file their tax returns. As people have so many other things to deal with and find themselves pressed for time, their tax returns go unfiled. When tax returns are not timely filed, penalties and fees build-up, adding additional stress! Additional tax and penalties can be avoided by timely filing their current tax returns, filing missing tax returns, and addressing back taxes. Taxpayers should speak with the IRS or an experienced tax professional about their situation to see if it is possible to work out a payment plan and reduce or remove any of the assessed penalties or fees.

In addition to the IRS assessing additional tax, penalties, and interest against back taxes, if tax returns are not filed and if back taxes remain unpaid, the IRS will also start sending notices about unfiled taxes and outstanding taxes owed to the IRS. These IRS notices are just the beginning of government collection attempts and should not go ignored. It can lead to more collection activity and trouble with the IRS!

What Happens if Notices are Disregarded?

If taxpayers continue to ignore the IRS notices sent to them in the mail, the IRS will attempt to secure the money owed to them. The first step the IRS will take is to force a Federal Tax Lien against any property taxpayers own. This will damage their credit score and harm their chances of getting approved for a loan.

The most common collection method used by the IRS is a levy. A levy is a legal process used by the IRS to seize (take) taxpayer assets and property. It is an attempt to collect the money owed. A tax levy can be enforced against any property, vehicles, boats, and bank accounts.

The other common way for the IRS to collect the outstanding back taxes is to enforce a wage garnishment. It is when the IRS takes a percentage of a taxpayer’s paycheck. The money is deducted from each paycheck by the employer and sent to the IRS. Funds are deducted from the taxpayer’s paycheck until the tax owed has been paid off.

What’s a First Step Taxpayers Can Take To Resolve This?

The first step to solving the tax problem is to file all tax returns that are required to file all unfiled back taxes prior and current tax years. The IRS is more likely to work with taxpayers who voluntarily file back tax returns than with those taxpayers who fail to file their tax returns. After all required tax returns have been filed with the IRS, a tax settlement may be an option to resolve taxpayer IRS back tax liability. A tax settlement is when the taxpayer works with the IRS to come up with a payment amount, which is less than the amount of tax, penalties, and interest owed. A payment plan or Installment Agreement is another way to work on getting back tax liability paid.

No matter the reason for owing back taxes, it is best to understand what to expect from the government if the back taxes are not paid. Avoiding the IRS will only lead to unpleasant collection actions and more trouble. Taxpayers should not avoid the IRS. Working with a tax professional is a good option to consider.

Experienced tax experts such as the Coast One Tax Group team, can help taxpayers to come up with a solid resolution plan that will address their special circumstances and financial situation, putting an end to back tax problems.

Give us a call today to find solutions to back tax problems.

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