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If you are notified that you owe back income tax, a large portion of the amount owed will likely be accumulated interest and penalties. The interest is not only charged on your back income taxes, but on the penalties too. To avoid further damage and penalties, you need to take action as quickley as possible.
Resolving the Issue with Minimal Damage
The essential first thing you must do is to fill out and file the tax forms for the year(s) in question. Voluntarily filing your tax return as soon as possible is vital to help erase the possibility of being subject to criminal charges. Before you can begin to deal with the IRS, or negotiate a possible resolution to their claim that you owe back income tax, you need to have filed your return.
Obtain a copy of your tax transcript from the IRS. Be certain that all of the income reported on all of your W-2 and 1099 information returns were included on the tax return for the year the IRS claims you owe back income tax. If the back income tax you owe is less than $10,000, the IRS may set you up on a repayment plan. If your financial circumstances make you unable pay, and you have filed your return for the year owing, the IRS might agree to put a temporary hold on their collection actions until your situation improves enough to allow you to repay what you owe.
Note: Many people opt for the security of working with a reputable, experienced tax professional to properly and accurately guide them through the resolution process with the IRS.
Resolving the Issue with Minimal Damage
The essential first thing you must do is to fill out and file the tax forms for the year(s) in question. Voluntarily filing your tax return as soon as possible is vital to help erase the possibility of being subject to criminal charges. Before you can begin to deal with the IRS, or negotiate a possible resolution to their claim that you owe back income tax, you need to have filed your return.
Obtain a copy of your tax transcript from the IRS. Be certain that all of the income reported on all of your W-2 and 1099 information returns were included on the tax return for the year the IRS claims you owe back income tax. If the back income tax you owe is less than $10,000, the IRS may set you up on a repayment plan. If your financial circumstances make you unable pay, and you have filed your return for the year owing, the IRS might agree to put a temporary hold on their collection actions until your situation improves enough to allow you to repay what you owe.
Note: Many people opt for the security of working with a reputable, experienced tax professional to properly and accurately guide them through the resolution process with the IRS.
