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Back Taxes

Back taxes refers to delinquent taxes which are overdue. Your record is researched to determine where you stand with the IRS, what you owe, and what penalties and fines are involved. Penalties can be very severe, such as liens, wage garnishments, or even property seizure. The IRS will work with you to determine the best payment plan for your situation.

Back taxes come into existence a few different ways

  • The IRS will automatically file tax returns for a taxpayer if the taxpayer fails to do so for several years.
  • When an individual is audited by the IRS, and the IRS determines that the individual owes more tax, the individual is charged an “accrued back tax” in addition to the regular tax.
  • A back tax is charged on a taxpayer who files returns but cannot pay the tax due.

Will I Owe Penalties for Back Taxes?

Penalties accrue when a taxpayer fails to file and/or pay taxes on time. A taxpayer may be eligible for penalty abatement if he or she can establish a reasonable case. A taxpayer must provide documentation to support a reasonable case if he or she was a victim of crime, substance abuse, mental disease, or a natural disaster.

Can I Reduce The Amount of Back Taxes That I Owe?

Yes. Back taxes can be reduced by a variety of actions or inactions:

  • An offer in compromise can be used to settle back taxes if the IRS agrees to accept it. By accepting an offer in compromise, the IRS recognizes that collecting the back taxes over a long period of time is not as valuable as settling them through an offer in compromise.
  • Chapter 7 bankruptcy can help you to eliminate or reduce back taxes, assuming certain conditions are met. You should consult with a competent tax attorney or bankruptcy attorney to determine whether you are eligible for tax discharge through bankruptcy.
  • If the IRS is unable to collect unpaid taxes after 10 years have passed, the debt is said to have expired. This is true. In exceedingly uncommon situations, back taxes can persist for more than 10 years. Please contact a competent tax lawyer if this has taken place.


How Can I Resolve IRS Tax Debt that I Cannot Afford to Pay?

  1. The Collection Division of the IRS is the most common approach to handling unpaid IRS debts. It is possible to enter into and negotiate the terms of an installment agreement with the IRS in a variety of ways. On-line services that advertise automated services often claim that there is an ‘unchangeable formula’ to lure clients. This is incorrect. Negotiating room is available for installment agreements, including non-collectible status (Bender, 2011).
  2. An “Independent Office of Appeals” may be requested to reconsider an unsatisfactory installment arrangement proposition from the Collection Division. A “Offer in Compromise” may also be submitted to resolve unpaid taxes. An IRS Offer in Compromise is one way to reduce your tax liability (usually more than 90% is reduced). The IRS will accept an Offer in Compromise if you can’t afford to pay the taxes you owe. To do this, you must submit extensive documentation to the IRS and wait months for processing and negotiation. 
  3. Many tax liabilities may be dischargeable in bankruptcy- specific rules apply as to whether a tax liability is dischargeable.”

What the IRS Has to Say About Back Taxes:

Need Help with Back Taxes?

Every person’s situation is unique so every tax issue we help clients with is unique. We can quickly and efficiently analyze your case and propose various options of resolution.

Call  1-800-730-4313 a free, no-obligation consultation with a tax attorney, or fill out our contact form.

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