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A Quick Guide to Understand Back Taxes

Patrick Walter
A Quick Guide to Understand Back Taxes

Is the IRS trying to contact you or has issued a tax notice? There is a good reason it is for collecting back taxes. Back taxes are one of the main reasons IRS to initiate collection actions. Taxpayers can deal with back taxes with robust financial planning and a sound understanding of the IRS tax relief provisions and the ins and outs of IRS back taxes and their consequences. Continue reading as we lay down a quick guide to understanding back taxes.


IRS back taxes are the pending (partially or fully) taxes owed by taxpayers. A crucial thing to note with IRS back taxes is that the dues continue to accrue interests and penalties that further aggravates the tax situation. In the worst case scenario, it can lead to criminal persecution as well. When it comes to collecting federal back taxes, the IRS can legally pursue taxpayers up to a decade from the date of filing of a tax return as per the Statute of Limitations.

Common reasons behind back taxes

There are many reasons (willful and otherwise) taxpayers fall behind on their taxes. Some of these include:

  • Failure to file a tax return 
  • Failure to pay after filing for a return
  • Failure to correctly report the total earned income in a financial year

Whether due to family emergencies, financial crunch, errors in filing, miscalculation or any other reasons, if you owe back taxes and are confused as to how to deal with them,  you should consult an expert IRS tax lawyer. They can help you escape IRS back taxes by suggesting IRS tax relief options you can avail provisioned under the Fresh Start Initiative (FSI).

Consequences of unpaid back taxes

As stated earlier, not paying back taxes can trigger various legal actions by the IRS that can be detrimental to your financial and social status. 

  • Issuance of a notices. If ignored/neglected, the IRS imposes additional penalties that attract interest between 0.5% and 25% on monthly basis. 
  • Issuance of a federal tax lien
  • Seizing of assets such as real estate, vehicle, and financial assets under the IRS levy
  • Issuance of a wage garnishment
  • Criminal proceedings

Tax Relief Options

The IRS provides several eligibility-based tax relief options to help taxpayers deal with federal back taxes including:

  • IRS Offer in Compromise: A legal document between the IRS and the taxpayer allowing both stakeholders to settle for an amount less than what is owed.
  • IRS Installment Agreement: A payment plan allowing the taxpayer to pay in monthly installments over an extended time frame.
  • IRS Penalty Abatement: A request for revocation of the additional penalties imposed due to economic hardship.
  • Currently Non-collectible Status (CN-C S): Request for a special status where the IRS puts a stay on collecting taxes for a limited period of time subject to regular financial evaluations of the taxpayer’s ability to pay back owed taxes.

All these tax relief measures require clearing the eligibility criteria, supporting documents, and sound financial planning. It is advisable to consult Dallas-based IRS lawyers to help you with the legal intricacies and applications.

Final Word

One must respond to the IRS at the earliest for back taxes to avoid the situation from getting worse. If you are dealing with back taxes and are looking to hire IRS tax attorneys in Dallas, choose the one that understands your requirements and helps you with the appropriate tax relief solutions.

Patrick Walter
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