When you don’t have enough money, don’t pay enough, or miss payments all together; you could end up owing “back taxes.” If you keep failing to pay at the right time, you can end up with tax debt that the Internal Revenue Service (IRS) can attempt to collect from you. While you may feel like you really messed up, don’t be too tough on yourself. According to the 2018 IRS Data Book, you are just one of more than 14 million American taxpayers who owe back taxes. But while you’re not an anomaly, it is still very important that you take the situation seriously.
How do you know if you owe back taxes?
Before you can go about doing anything else, it’s first important that you know whether or not you owe back taxes. There are four different ways in which you can find whether or not you owe the IRS any money. They include the following methods of contact:
- Online – you can use the online tool
- By phone – you can call the IRS at 800-829-1040, from Monday through Friday 7 a.m. to 7 p.m. local time
- In-person – you can go to the nearest IRS office
- By mail – Be on the lookout from any notifications from the IRS that come in the mail. If you receive some, it’s likely that you do owe back taxes
If you have been receiving letters or other forms of notification from the IRS that you have tax debt, it can be extremely overwhelming. You may wish to simply ignore these notices in the hopes that they will cease. However, by doing so, you can make a manageable situation much worse.
Collecting Outstanding Money
The IRS will collect any outstanding money from you by continuing to issue additional fees until the matter has been resolved. Additionally, since the IRS is a government agency, it has the ability to hold onto your future refunds, garnish your wages, or even put a lien on your property.
Neither is it in your best interest to assume that you can merely wait them out. Since the IRS has 10 years to go after you until your debts are written off, and it rarely forgives anyone of their debts, you would be dealing with financial consequences and other issues for a long time.
And while even though there is this Collection Statute Expiration Date (CSED), sometimes the IRS can still extend it by seizing your property, entering into a period of non-collectability, or entering into an installment agreement. However, if you are coming to your CSED, you may be able to qualify to have part of your debt reduced by providing a compromise or a partial payment installment agreement.
Getting Your Back Taxes Under Control
If you find that you do in fact owe back taxes, it’s important to remain calm, as there are things that you can do in order to get your debt back under control.
- Carefully read over any letters or notices that you receive from the IRS. They may inform you as to what the issue is, which may pertain to:
- Your balance due
- A different size refund than what you expected
- Questions about your tax return
- Delays in processing your tax return
- Changes made to your tax return
- Additional information for verifying your identity
- Be sure to reply to the IRS as soon as possible so as to avoid any additional fees. This can also help to preserve your right to appeal should need be.
- Regardless of whether or not you are able to pay the outstanding amount in full, it’s still important to make payments when agreed upon (even if it’s just a small amount).
- Be sure to make copies of any letters or notices and to keep them in a safe place should you need them at a later time.
- Lastly, if you aren’t sure as to how you should proceed, it’s important that you reach out to the IRS or to a reputable tax professional, such as a tax attorney.
How Long Do You Have to Pay Back Taxes?
You have various options for paying back your taxes, each with its own implications. This may mean anything from you having to make at least a small payment immediately, to having up to 6 years to pay it all off.
You may feel extremely overwhelmed, but it’s important to bear in mind that there are many ways that you can get yourself out of your tax debt.
It’s essential that before you take any action, you understand all of your options for settling your tax debt. They may include everything from reducing your debt, to payment plans, to compromises, or even total elimination. The best thing that you can do is to consult with a knowledgeable and experienced tax attorney.
Contact Our Experienced California State Tax Attorneys
At Regal Tax and Law Group, PC, each client receives powerful representation and individualized attention. When you consult with us, we will take the time to help you understand all the options available to you so that you can make informed decisions about your tax matter. We have a well-earned reputation as trusted California tax attorneys with the know-how to resolve the most complex tax controversies. Please contact our office today for a complimentary consultation.