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 resolve back taxes with the following steps:
  1. File your taxes
  2. Pick a payment plan
  3. Follow Payment Plan Accordingly
In this post, we’ll discuss your options for filing back taxes, among other topics, including:

How to Deal With 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 in back taxes. Despite what you can or can’t pay, it’s important to issue an immediate response to the IRS indicating your situation. 

  1. File Your Taxes 

Before worrying about how you will pay off your tax debt, it’s critical that you file your taxes. The penalties associated with failing to file your taxes are often more severe than those incurred by your tax debt.  Whether or not you can actually pay your owed taxes now, your first step in resolving back taxes should be filing. The steps involved in filing your back taxes are essentially the same as those you’d follow when filing for the current year. Start by gathering information and tax documents, such as W-2’s and 1099’s. Once you’ve filed your taxes, you can start thinking about how to pay down your tax debt. 

  1. Pick a Payment Plan

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, such as an installment agreement, an offer in compromise, or a temporary delay of collection. Let’s take a look at each of these back tax payment plans in more detail.

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 the agreed-upon 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

  1. To apply for an offer in compromise, follow these steps:
  2. Complete IRS Form 656 and 433-A
  3. 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. 
  4. Include the $205 fee with your application (low earners may request a waiver). The IRS accepts personal checks. 
  5. Mail your application, documents, and fee to the IRS. The appropriate address can be found in this IRS handbook. 

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. 

3. Follow Payment Plan Accordingly

Once you’ve secured a repayment plan with the IRS, it’s critical that you meet your expected payments until your tax debt has been paid off. Not meeting payment requirements could cause problems and additional tax debt later on down the road. 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. 

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.  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. It’s important to file taxes by the deadline and pay 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. Individuals who do not fulfill their back tax obligations may be subjected to the following penalties:

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. 

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.  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. 

Moving Forward on Tax Debt

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.  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.