The Importance of Filing Back Taxes
Filing past-due taxes involves several complicated procedures. Several individuals keep falling behind on their taxes due to lack of funds, late filing, failure to file, under-withholding, errors in tax calculations, or other justifying situations. Below are some important reasons to file your back taxes:
- To reduce or avoid late payment penalties and accumulation of interest charges
- To retain your eligibility for tax refunds; you can only claim tax refunds within three years
- To protect your disability benefits, Social Security retirement benefits, and other public benefits
- To ensure loan approvals or prevent delays or other possible issues when obtaining loans
- To safeguard your credit score
An experienced attorney can enlighten you about the benefits of filing your back taxes and help you understand the potential penalties and consequences if you fail to file.
Possible Penalties for Failure to File
If you fail to file your past-due tax returns, here are the possible penalties:
- The IRS may place liens on your property.
- The IRS may seize your property and other assets.
- The IRS may levy your financial accounts or garnish your wage.
- The IRS will charge you a failure-to-pay penalty.
However, owing the IRS more than you can pay isn’t a genuine reason for failing to file your back taxes. Rather, you can explore the different IRS programs available for you to get tax relief.
Owing More Than You Can Pay
If you are owing to the IRS more than you can afford to pay in past-due taxes, here are the possible options for you to achieve tax compromise or relief.
If you believe you can settle your back taxes through monthly payments, you can enter into a payment or installment agreement with the IRS. Depending on the amount you are owing, you can choose between a short-term payment plan and a long-term payment plan.
- Short-term payment plan: This is the payment agreement option for taxpayers who owe $100,000 or less in combined tax, interest, and penalties. This plan is to be paid within 180 days or less.
- Long-term payment plan: This is the payment agreement option for taxpayers owing a maximum of $50,000 in combined tax, interest, and penalties. This plan is to be paid within 120 days or more.
Through any of these payment plans, the IRS will give you more time to settle your past-due taxes.
Offer in Compromise
Offer in compromise (OIC) is another option through which taxpayers owing back taxes can get relief. OIC allows you to settle your back taxes for less than the actual amount owed. It requires proposing a settlement offer to the IRS to reduce your debts. An offer in compromise may be the ideal option if you are unable to pay your back taxes or if paying your past-due tax returns puts you in financial adversity.
How Legal Counsel Can Help
Paying back taxes can help protect your public benefits avoid additional penalties and interests. Even if you owe the IRS more than you can afford to pay, there are still ways for you to achieve tax compromise or relief. Therefore, if you need help filing unfiled tax returns, consulting with a knowledgeable tax law attorney is crucial for proper guidance and to help resolve your tax problems.
At the Law Office of David A. Semanchik, I have the experience and resources to help clients navigate the complexities involved in filing back taxes. As your legal counsel, I can evaluate your personal situation, review your tax records, and determine the right way to settle your back taxes. Also, I can find out your outstanding balance with the IRS, attempt to negotiate a reduced payment, or explore additional options to help you achieve tax relief.