How Back Taxes Affect You

Last updated on May 9, 2023

Any amount of taxes that remain unpaid after the filing deadline are treated as back taxes. Having a tax debt means collection actions by the IRS such as lien and levy, and the assessment of penalties and interest on the tax debt amount.

After the filing deadline, the IRS reviews tax information to identify the taxpayers that did not file their returns. The IRS then sends notices regarding the payment of tax debt, and may move to seizure and/or selling of property/assets if the taxpayer ignores or avoids resolving the tax debt case. Therefore, it is wise to file your return and explore tax debt resolution options.

After the tax debt has been incurred, you can get a reduction in its amount (Offer in Compromise, Partial Payment Installment Agreement, etc.), have the penalties forgiven or reduced (Penalty Abatement), or the tax debt burden shifted to your spouse by claiming innocence (Innocent Spouse Program). IRS payment plans allow you to comfortably resolve your tax debt case.

To negotiate with the IRS and receive maximum relief, it is essential to use the help of a tax professional or a tax service. Before applying for a payment plan, consult a tax expert to understand the advantages and drawbacks of the payment plans. Back taxes must be resolved sooner or later, but it is beneficial to resolve back taxes as early as possible.