Back Taxes Might Come to Haunt Years Later
Last updated on August 26, 2015
The IRS can begin the collection process for taxes owed at any time, and when it does, the total taxes owed are usually much more than original amount stated due to penalties and interest.
Michael Jackson is in the news for back taxes years after his death. The IRS claims that the Jackson estate owes $702 million in back taxes. The IRS had issued a notice before Jackson’s death in 2009 stating that the Jackson estate had a tax deficiency of $505.1 million. They also assessed $196.9 million in penalties. The case is currently being fought between the IRS and the Jackson estate, and awaits judgement.
The amount of back taxes can increase substantially because of IRS penalties and interest over the years. The greater the amount of taxes owed, the greater the amount of penalties and interest.
The IRS has ten years to collect back taxes, but under certain circumstances, has been known to collect back taxes after more than a decade. The IRS usually informs a business or an individual taxpayer about their back taxes well before the statute of limitations reaches expiration, but it may be allowed to begin the collection process after the expiration of the collection deadline if deemed reasonable.
Back taxes give power to the IRS to collect the back taxes at any time with added penalties and interest. Compliance is therefore the better option than fighting a legal battle.
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