Based on one’s financial situation, the tax debt can be settled by an amount less than what is owed through making the offer. The process is rigorous and selective, but during the period of the review of the application, garnishment is stopped.
Possible consequences with having state back taxes, include tax liens, wage garnishments, bank levies and property seizures. Though jail time is unlikely, many state tax officials do have the right to arrest a taxpayer.
Most of those hoping tax season will pass them by are those who know they will owe money or feel filing their taxes is going to be too much work. If you find yourself left with unpaid and back taxes, do not fear there is still hope.
Some taxpayers find they owe more than anticipated and circumstances may make it is impossible to pay their entire tax bill upfront. If you find yourself owing more than you can feasibly afford, there is help available.
Once a lien is in place, it could limit your ability to get new credit. Plus, should you file for bankruptcy, your federal tax bill is exempt and once your bankruptcy is finalized you will still owe the full amount of your tax bill.
If you continue to delay filing your back taxes, you may find yourself having to deal with the consequences from the IRS. When a taxpayer does not file a past-due tax return, the IRS may file a substitute return for you and begin enforcement action.