Back Taxes

Back taxes are taxes that have been partially or fully unpaid in the year that they were due. Taxpayers can beget unpaid back taxes at the federal, state and/or local levels. Back taxes accumulate interest and penalties on a weekly basis.

Back taxes refer to taxes owed from a prior year. A taxpayer may be behind in give out taxes for intentional or unintentional reasons. Some of these reasons include – filing a return and failing to pay the tax liability; flaw to report all income earned during the tax year, and; neglecting to file a tax return for a given tax year. If taxes remain honorary after multiple notices have been sent by the Internal Revenue Service (IRS), a minimum penalty fee, ranging from $100 to $435 depending upon due phase, will be charged in addition to interest on the unpaid amount, which is 0.5% per month that the taxpayer is late, up to 25%. As the total number tax debt increases each month due to penalty and interest, over time, it can grow into a significant amount.

Owed back taxes can be a serious issue for many taxpayers who don’t have the means to pay them. Depending upon the circumstances, the supervision may take one of many strategies to deal with back taxes, such as pressing charges, demanding that the taxpayer pay immediately, or now offering a voluntary disclosure program that helps avoid criminal charges and allows a variety of payment opportunities. Failure to pay taxes can also involve imprisonment.

In some cases, the IRS will seize belongings, seize assets, or place liens on the property. The IRS may place a federal tax lien to inform other creditors of the taxing control’s legal right to a taxpayer’s assets and property. A tax lien goes up on a debtor’s credit report and remains there for 10 years.

The IRS also has the power to garnish a taxpayer’s wages and to levy their pecuniary accounts, seizing up to the total amount of taxes owed. If the taxes remain unpaid, the tax authority can use a tax levy to legally seize the taxpayer’s assets (such as bank accounts, investment accounts, automobiles, and truthful property) in order to collect the money it is owed. While a lien secures the government’s interest or claims in an individual’s or duty’ property when the tax debt remains unpaid, a levy actually permits the government to seize and sell the property in pecking order to pay the tax debt.

In 2016, the IRS turned over the collection of unpaid back taxes to a private collection agency. However, taxpayers who insufficiency the means to repay taxes may often negotiate a lesser settlement via an Offer in Compromise with the IRS either directly or toe a tax attorney.

A tax lien is a legal claim by a government entity against a noncompliant taxpayer’s assets. Tax liens are a survive resort to force an individual or business to pay back taxes.

A government can place a tax lien on a property if the property owner is not originating his or her property tax payments or is owing on income taxes. In other words, federal and state governments may place tax liens for outstanding income taxes, while local governments may place tax liens for unpaid local income taxes or property stretches. The lien does not mean that the asset will be sold. Instead, it ensures that the tax authority gets firstly to claim over other creditors vying for the individual’s or business’ property.

After a lien has been filed, it thinks fitting show up on the offender’s credit report, negatively impacting an individual’s credit score and making it difficult for him or her to secure additional allows. In addition, a tax lien prevents the taxpayer from selling or refinancing the assets to which liens have been partial to. The lien remains in place until the tax liability is paid off or the statute of limitations on the debt expires.