When Back Taxes Resolution Goes Wrong

Last updated on October 16, 2023

Back tax resolution should be sought out after carefully reviewing your tax case and all of your options. Most individuals use a professional tax service to resolve their tax issues, but choosing the wrong company can prove to be disastrous. Incompetence and inexperience are two main reasons resolutions fall apart. A tax professional or service that does not have adequate experience in handling tax cases may take longer to handle your issue and provide you with inferior assistance.

Back Taxes Resolution Using Outside Help

Another serious problem that has led to taxpayers losing money and getting deeper into tax debt comes from dealing with fraudulent tax services. Not all tax services and professionals are honest. There have been cases where some tax resolution services were found to be demanding exaggerated upfront fees from taxpayers, sometimes even charging hidden fees later.

In order to avoid falling for fraudulent tax service gimmicks, you should thoroughly research a company’s resolution history, clients’ feedback, location, and qualifications. Most legitimate companies provide free consultations to taxpayers so they can determine the best course of action.

Avoiding Resolution of Back Taxes

Resolving your tax debt shouldn’t be avoided, as the IRS takes action on unresolved cases. Avoiding back tax resolution leads to harsh collection efforts by the IRS such as a lien or levy. When a tax debt case remains unresolved, collection actions can be financially damaging. Many times, taxpayers believe that ignoring IRS notices or unpaid taxes will not incite further action. Disregarding IRS notices not only leads to collection actions, but also increases the total amount to be paid due to the accumulation of IRS penalties and interest.

The IRS usually charges penalties for non-payment of taxes at 0.5 percent per month. However, in some cases, the penalty can reach up to 25 percent. Penalties and interest are charged each month, increasing the balance substantially.

Defaulting on an Payment Agreement

After a taxpayer has qualified for a payment plan, he or she is required to meet the agreed upon resolution requirements. If a taxpayer defaults on an agreement, the IRS terminates it. In order to get a terminated plan reinstated, the individual must provide a valid reason defaulting. If the agreement is terminated and the taxpayer does not get it reinstalled or does not qualify for any other payment plan, then the IRS can resume collection efforts.