![](https://i0.wp.com/markmeets.com/wp-content/uploads/2022/08/Business-news.jpg?resize=467%2C311&ssl=1)
What Exactly Are Back Taxes?
Back taxes are taxes that were partly or entirely unpaid in the fiscal year in which they were due. Unpaid back taxes may exist at the federal, state, and municipal levels. In addition, back taxes frequently accrue interest and penalties.
Back taxes are taxes that should have been paid but were not. Back taxes are also subject to fines and interest and must be delivered on time.
If overdue taxes are not paid, drastic legal action may be taken, such as tax liens, wage garnishment, or jail time.
Recognizing Back Taxes
Back taxes are taxes outstanding from a previous year. A taxpayer may fall behind on tax payments for either deliberate or accidental causes. Filing a return and failing to pay the tax burden, failing to disclose all income made during the tax year, and failing to submit a tax return are some of the causes. If a taxpayer fails to submit a tax return, the penalty is 0.5% of the amount owed.
This penalty is assessed every month or portion of a month until the tax is paid in full or the sentence exceeds 25% of the tax outstanding.
Furthermore, the IRS assesses interest on the due balance. The IRS sets the interest rate, which fluctuates quarterly. The interest rate is 3% as of the third quarter of 2020. As the overall tax obligation grows each month owing to penalties and interest, it may quickly balloon.
Unpaid back taxes may be a severe problem for many taxpayers who do not have the financial means to pay them. Depending on the circumstances, the government may pursue one of many ways to collect unpaid taxes, such as filing charges, demanding immediate payment, or sometimes providing a voluntary disclosure program that helps prevent criminal charges and offers a range of payment alternatives.
When you ignore or fail to pay a tax bill, the government has a legal claim over your property in the form of a federal tax lien. The lien safeguards the government’s interest in everything of your belongings, including natural land, personal property, and financial assets.
The distinction between a lien and a levy
A lien is not the same as a levy. A lien protects the government’s claim on your property when you do not pay your tax bill. A levy seizes property to pay off a tax obligation. If you do not pay your tax obligation or make agreements to resolve it, the IRS has the authority to levy, seize, and auction any real or personal property in which you own or have an interest.
Planned payment arrangement with the IRS
A payment plan enables the taxpayer to pay off their obligation monthly over one to six years. It is the IRS’s most popular method of relieving debt for many individual taxpayers.
Here are a few things you should know about obtaining tax relief via an IRS payment plan:
· A payment plan will not exclude you from paying interest and penalties for late payments. These accumulate until your balance reaches zero.
· If you owe more than $25,000, you must make payments via automated withdrawals from your bank account.
You will be charged a processing fee if you pay with a debit or credit card. The fee for debit cards is between $2 and $4 for each payment, while the fee for credit cards is about 2%.
“Low-income applicant” typically indicates you have an adjusted gross income that is equal to or less than 250% of the federal poverty line. IRS Form 13844 will tell you whether you qualify.
Qualify for a compromise offer with the IRS
You may be able to get tax savings by making an “offer in compromise.” An offer in compromise allows you to pay your past taxes with the IRS for a lower amount than you owe. According to the IRS, it may be an option if you cannot pay your tax bill or if doing so will place you in financial difficulty.
The IRS will strive to find a fair solution in cases of financial difficulty, but the conditions for the OIC program are complex. The IRS will attempt to put you on a payment plan if feasible. A skilled tax expert, such as the consultants at Ideal tax, is well-versed in IRS procedures and can provide a free consultation to assist you in reaching the best possible conclusion with the IRS.
Author Profile
-
Interviewer and Photographer
Charley is known for finding and finding new music talent and that is why she is a perfect for for our team.
Credited also in Daily Mail and The Mirror.
Email https://markmeets.com/contact-form/
Latest entries
TVFriday, 9 August 2024, 20:16The Walking Dead Cast Ranked From Richest To Poorest
MusicFriday, 2 August 2024, 18:24Top 10 songs that everybody knows
TVSaturday, 25 May 2024, 20:00Mr. Morris Lines from Friday Night Dinner: Hilarious Quotes by Harry Landis
Film PremieresMonday, 4 March 2024, 17:35Who secures London film premiere tickets
You must be logged in to post a comment.