How Back Taxes Affect You - Tomorrow, Next Year...

The idea of owing back taxes is not a pleasant idea for anyone. Anytime a tax amount owed to the IRS goes unpaid, it is considered a back tax. They can be an unexpected surprise at tax time, adding stress to an already stressful period. Not only do you suddenly owe money that you did not really expect to pay, but there are also threats of fines and jail time if you do not pay them.

No Need to Panic

As long as you live in the United States, and make money, you can expect to pay taxes every year. Back taxes are taxes that are not paid when they are due. Just because you are presented with an unexpected tax bill does not mean you have to panic. There are actions that you can take with internal revenue service taxes in order to avoid penalties and interest.

What Happens

The first thing that happens when you owe back taxes due is that the IRS sends you an automatically generated letter that notifies you of backs taxes due. The letter will be followed with CP notices. If you do receive these in the mail it is wise not to ignore them. Further penalties can result the longer you wait to address the issue. If you do not respond to these letters the IRS will start taking collection against you. Some of these actions can include encumbrances of property and seizure of assets.

How To Avoid Back Taxes

You can avoid the prospect of costly penalties by offering an “offer in compromise.” An offer in compromise allows the person who owes back taxes to pay a smaller amount than the amount owed. An offer in compromise must be accepted by the IRS and must be reasonable. A tax offer in compromise can also be filed if there is doubt to the liability of taxes owed. This can be done if the taxpayer has new evidence to re-evaluate the case or there was an error done in evaluating the tax case.

The tax offer in compromise is not the most reliable method of back tax help. The most important thing to remember is to always be honest with the IRS. The Internal Revenue Service is much more lenient with those that come forward in a back taxes situation and file for themselves as opposed those that do not.

If you owe anything in back taxes it’s best to start thinking about how to take care of it. Ignoring it will not make the problem go away.