Back Taxes Help: Get Help Filing IRS Back Taxes

Facing the reality of back taxes can be a daunting experience, but it’s never too late to file your back tax returns. For some people, their first notice of back taxes is when a levy hits their paycheck, bank account, or both. Others receive correspondence from a State or IRS auditor, claiming that they owe thousands of dollars – together with substantial penalties and interest – for past tax returns. Some fail when filing back taxes perhaps believing that they are not required to file, only to find that the IRS has filed their returns for them. Faced with mounds of IRS correspondence, some people feel too overwhelmed to act, which further compounds their problems. It’s important that those who are experiencing back taxes act as quickly and efficiently as possible. As stated further on, the consequences for not handling a back tax problem can be significant. If there’s an issue, consulting a tax professional is your best option in ensuring the taxes are handled correctly, and that you don’t accrue any further penalties. One of the first questions regarding back tax help that an expert will ask is how much is actually owed to the IRS. This information helps to narrow down the options that they will be able to present.  Many factors can affect your eligibility for the different types of back tax help.  The programs can differ depending on the amount of debt you have, your  current income, and even the age of the debt. Read on to find out more about the options you have when seeking back tax resolution. Here’s a list of the topics we’ll discuss in this post:

Getting Help Filing IRS Back Taxes

The IRS offers various payment plans that can help taxpayers who may not be able to pay the full amount they owe. Despite what you can or can’t pay, a response indicating your situation should be sent to the IRS immediately.  Before worrying about how you will pay off your tax debt, it’s critical that you file your taxes. As stated previously, the penalties associated with failing to file your taxes are often more severe than those incurred by your tax debt. Whatever method of repayment you decide to use, your first step should always be to file. If you need help filing back taxes, a Community Tax preparation specialist will be happy to assist you.  Once you’ve filed, you can start thinking about how to pay down your debt. It’s a good idea to pay off as much tax debt as you can and then you can begin to explore IRS payment options: an installment agreement, an offer in compromise, or a temporary delay of collection.

Installment Agreement

This is a monthly payment plan that allows you to pay a rate to the government over an extended period of time, usually anywhere from 4-6 years. If you owe $50,000 or less, you can apply for an online payment agreement. If not, then you’ll have to make the request by filing Form 9465 and then proceed with a Collection Information Statement as well: Form 433-A, Form 433-B, or Form 433-F.

Offer in Compromise

This is a settlement offer that you and your tax professional make to the IRS which amounts to less than the debt owed. This is how it works: you pay this amount and the IRS will then forgive the remaining balance. This type of payment alternative can be tricky because the taxpayer has to meet a specific criterion that proves they’re eligible. For instance, if the taxpayer is eligible for an installment agreement then they will not be eligible for an offer in compromise. This sort of payment plan is specifically for those experiencing extraordinary hardship. However, if the taxpayer, usually assisted by a tax professional, can declare and prove that they’re eligible, then the offer in compromise can be incredibly beneficial.

Applying for an offer in compromise

To apply for an offer in compromise, follow these steps:
  1. Complete IRS Form 656 and 433-A
  2. Include relevant documentation: paystubs, investment statements, bank statements, and other financial documents listed on each of the forms mentioned above. Be sure these are copies, not originals. 
  3. Include the $205 fee with your application (low earners may request a waiver). The IRS accepts personal checks. 
  4. Mail your application, documents, and fee to the IRS. The appropriate address can be found in this IRS handbook
Note: The deadline to file taxes for the tax year 2019 has been extended to July 15, 2020 due to the coronavirus pandemic. 

Currently Not Collectible

This option is not a payment plan, but more of a diversion of the immediate amount due. In this case, the IRS labels your account ‘not collectible’ and will then wait for your financial situation to improve. Here are a few things to keep in mind if you do apply for this option:
  • Be sure to file Form 433-F to apply for this status.
  • By no means does this reduce the amount of the tax debt owed — and in most cases your debt will accrue interest while the status is in effect.
  • The IRS will continue to check in to see whether your finances have improved enough to begin repayment on your debt. 
There are always options when dealing with tax debt. It’s important that if you’re going to tackle the problem on your own, you do an ample amount of research and understand exactly what repayment option suits your situation best. However, for these types of issues, it’s strongly recommended that you consult a tax professional and ensure that everything is done correctly.

Working with a Tax Relief Company

Back taxes can be extremely complicated, especially if you owe multiple years’ worth. If you find yourself under a mountain of IRS debt (not to mention the accompanying mountain of IRS forms), Community Tax is here to help.  Some taxpayers hesitate to work with a professional tax relief agency because they believe that they can pay off their tax debt and settle all obligations themselves for cheaper. However, choosing that option often comes with significant risk. Small mistakes can add up to massive increases in fees, interest accrual on debt, and even legal action.  By choosing to work with a tax relief firm like Community Tax, you ensure that your personal documentation, IRS forms, and payments are filed correctly and in a timely manner. Working with professionals provides security that going it alone often lacks. 

What are the Consequences of Not Filing Back Taxes?

The consequences for failing to pay taxes and failing to file taxes can vary based on the specific situation, with failure to file incurring much higher rates of penalty. If taxes remain unpaid, a truant taxpayer may be charged high penalty interest rates, see their assets seized, and in rare cases, face jail time. At the very least, if you’re looking for more time to pay your taxes, you can file Form 4868 for a six-month extension. This type of correspondence ensures that the IRS knows the taxpayer is experiencing difficulties paying their taxes or filing them by a given deadline. If you simply don’t file taxes, there’s a possibility that after extra fees have accrued, the IRS will file your taxes for you in the worst way possible; they will file the taxpayer as a single individual with only one exemption, despite what criterion they fall under. This will in turn result in a larger amount owed. If you don’t pay taxes, the IRS will take action against you. It’s usually not immediate, but after enough back taxes go unaccounted for, the government will take action and put a lien on your paycheck or property — perhaps even a state lien, depending on the situation. As a whole, you will likely take a large monetary hit and your credit score may fall. You’ll have to spend extra money than you otherwise wouldn’t have had to pay. In the worst case scenario, especially if you’re wealthy and seemingly capable of paying their taxes, the government can decide that you’re purposely not paying taxes, declare fraud, pursue legal action. It’s important to file taxes by the deadline and pay out any back taxes you may owe in order to avoid penalties, a tax levy, and legal consequences.

Will the Government Levy My Assets?

It is possible that the IRS will levy the assets of a taxpayer who has repeatedly failed to make payments. At the bare minimum, when filing the next year, all refunds or tax breaks will go straight into the pot of money you owe to the IRS. If you still fail to pay your full debt, then the government can take these following steps:

Wage Garnishment

If the government imposes wage garnishment on your income, your employer will be legally required to withhold a certain percentage of your pay to cover unpaid taxes. This is the easiest of the punishments the government can enforce when there’s failure to pay taxes.

Tax Lien

If a tax lien is enforced, the government has claimed your property as an assurance of rights to your property over other creditors waiting for debt payment. That means if you lose your property to the government, it will go towards your taxes, and you’ll still owe money to creditors.

Bank Levy

Tax officials will demand that your bank puts a hold on the funds in your account, and seize said funds to cover your unpaid tax liability. This allows for 21 days before the government can legally withdraw the money from your account to cover the taxes owed.

Property Seizure

All of your property assets are up for grabs if you have repeatedly avoided repaying your taxes. Authorities may seize items such as your home, car, boat, or any other asset that might be sold to cover your debt. Again, when this occurs, the funds derived from the sale of your property(s) help to clear your tax debts, but do not contribute to the individual loans owed for any of the given properties seized. It is essential that you speak with a tax professional as quickly as possible to formulate a payment plan that will work for your individual needs. The goal being to avoid any of the aforementioned penalties. A tax professional can help work out a plan between you and the government that works for both parties and keeps you out of legal trouble and more debt.

How Do You File Back Taxes?

Back tax help often involves paying your balance over time. When a balance is low, it is less difficult to pay off in a short amount of time.  However, higher balances may require professional back tax help in order to set up agreements with the government to pay over a longer period of time without additional penalties, fees, or interest. Once the tax resolution  program has been decided upon, a taxpayer can then account for the payments in their budgets. Fortunately, there are several ways to resolve these problems and get back taxes help. If the balances are the result of returns filed by the IRS, then filing back taxes can solve most of the problem. A return prepared by a professional tax preparer will ensure that the taxpayer benefits from all allowable deductions, credits, and other tax benefits. If you do insist on doing them yourself, although this is not advised, the proper research must be done beforehand. As for a few tips to remember, read below:
  • Your late tax returns have to be filed on paper. It’s completely fine to use whatever program to prepare the returns themselves, but they ultimately have to be mailed into your local IRS service center. Remember that despite the situation, you cannot electronically file your back tax returns.
  • Differentiate the envelopes you use for each tax return. The most advised route here is to send them via certified mail. This ensures that they’re going to the correct destination and more importantly provides confirmation of whether they’re received or not. Keeping the different returns in individual envelopes basically helps the IRS in their initial round of processing, and reduces the room for error if there are multiple.
  • Make sure to hand deliver if your deadline is up. If you’re in a bad time crunch, then hand deliver the returns to your local IRS office. It’s advised that you make photocopies of the first page of each respective return. Once at the office, ask the IRS to stamp each photocopy in the order it’s received. The photocopies then become legal receipts which can ensure date of filing, time of filing, and substance of filing.

How Many Years Later Can You File Back Taxes?

No matter when you last paid taxes, it’s critical to file a tax return for every year that you have not paid. Tax debt builds over time and doesn’t just go away, and the fines associated with failing to file your taxes will be added to the total that you owe the IRS. The deadline to file back taxes and still be able to claim a refund, however, is 3 years. You will also be able to claim any tax credits you are owed if you file within that deadline. After 3 years, however, you forego your claim to any refunds or tax credits. 

Advantages to Filing Back Taxes

The advantages to filing back taxes are straightforward: failing to file incurs a fee of 5% of your unpaid tax balance. By filing your back taxes, even if you haven’t figured how you plan to pay them, you can dodge that additional fee.  Additionally, if you fail to file your taxes, the IRS will do it for you. While that may sound nice, it won’t benefit you; the IRS will not grant you every deduction, exemption, and tax credit you are eligible for, thus reducing your refund or increasing your bill. By filing your taxes yourself, or working with tax preparation professionals like Community Tax, you’ll be able to claim all the tax relief that you are eligible for.  Filing taxes for previous years can be difficult, however. A Community Tax representative is happy to help you organize your taxes and file them correctly, so you can avoid any fees and ensure that you claim every bit of tax relief you are entitled to. 

What if I Have Been Audited?

Although audits are usually rare, there is still a chance that the IRS will investigate a claim. Sometimes the computer system will catch a red flag and then do its due diligence on its own. If a taxpayer is being audited for back taxes, the first thing to assess is exactly what is being audited and why. Remember, the IRS has access to all financial information (wages, mortgage interest, pre-exposed debt). Once these questions are answered, you will be able to understand exactly what sort of documentation you need to provide to prove that your taxes are accurate. In the case that you do not have any of these documents available, you will then have to proceed to third parties to obtain proof of your claim. As with all dealings with the IRS, it is advised to respond in the timeliest and most polite manner possible if you receive an IRS audit letter. This is especially important throughout the process, as there will be an auditor designated for your immediate case. A true audit is generally something that is very serious and should not be taken lightly. We recommend a tax professional as they will help you prepare a defense that includes verification of expenses and deductions claimed on a tax return. Penalties can be removed through penalty abatement, provided that a reasonable cause can be shown.

Moving Forward on Tax Debt

Due to the amount of preparation that needs to be done when handling an audit or working through back taxes, without professional help you may risk overlooking crucial information you need to provide for proof of accuracy. You should also be wary of back tax help scam artists who claim that all debt can be settled for “pennies on the dollar” without asking any background questions concerning the debt.  Always ensure that any tax professional that is hired is at least a CPA or an Enrolled Agent. It’s critical that you do thorough research on tax companies, including checks with the Better Business Bureau.  Back taxes are not something to be taken lightly and can often prove to be quite complicated. In order to ensure that you do not run into further trouble or continue to accrue interest on your outstanding tax balance, the right steps need to be handled carefully, quickly, and professionally. With the many options available to get back taxes help, choosing the correct path to tax resolution can be difficult.  Community Tax provides full-service tax help and employs experienced tax practitioners who are able to analyze your particular circumstances, identify the source of the tax balances, and develop a plan to most efficiently resolve your back tax problems including filing back taxes. Just as there are many ways to incur back taxes, there are also many ways to fix them – and applying the correct fixes in the correct order can potentially save you thousands of dollars. Community Tax is proud to offer free consultations, so you can get to know us before committing to a back tax resolution plan. Find the back tax help that best fits you as soon as possible, and don’t risk falling any further into back tax debt, by calling Community Tax today at 1-888-676-4319.