Owing Back Taxes to the IRS is a Common Problem

A spokesman for the Internal Revenue Service said in 2020 Americans owed over $530 billion in back taxes, penalties, and interest. The number of people who owed back taxes is considerable, and the amount owed is staggering. And the number is likely to have grown since 2020.

Why Do People Fall Behind on Their Taxes?

Most people have an adequate amount withheld from their weekly paychecks to cover their IRS bill each year. In fact, many people receive a refund because too much was withheld. So how do so many millions of people fall behind on their taxes each year? According to tax experts, people fall behind on their taxes for a number of reasons.  Some of these include:

  • Too busy: Some people feel overwhelmed by the paperwork and intend to prepare their tax return but keep putting it off.
  • Life disruptions: These could include death, illness, divorce, or unemployment, and prevent many people from timely filing or payment of their taxes.
  • Insufficient funds: Sometimes people simply don’t have enough money to pay their tax bill.
  • Underwithholding: Some people claim too many exemptions and wind up owing more in taxes than they can easily pay.
  • Failure to pay estimated taxes: This is by far the biggest reason that people fall behind in their tax debt.

File your taxes on time, Even If You Can’t Pay Your Taxes

Even if you can’t pay your entire tax debt at once, you should still file your taxes in a timely manner.

If you owed the IRS money, it’s best to submit your return and make arrangements to pay off what’s owed as soon as possible. The IRS offers several options for helping people who are unable to pay their taxes all at once:

  • File for an extension
  • File late and then make arrangements to pay the balance
  • Apply for a hardship waiver (if applicable)
  • Apply for an offer in a compromise or installment agreement

Don’t ignore the IRS’ collection attempts

The statute of limitations for paying off a tax debt with the U.S. Internal Revenue Service is 10 years. This statute of limitations starts from the date you file your return. But, beware of the factors that could possibly ‘reset the clock’ on this statute of limitation. For instance, if you are later audited or a correction is made on your return, the 10 year period starts from that date. 

The IRS’ collection attempts may get more aggressive over time. And if you continue to ignore the IRS, your options will become more limited.

If you ignore an IRS notice, the agency can charge you a late payment penalty. It can also begin collection actions, which could include issuing a levy or a lien on any current or future property.

Begin a discussion with the IRS and let them know that you are interested in resolving the matter. But, there are some potential ‘landmines’ in this communication process, so it is a good idea to get some expert legal advice before starting these discussions.

A Lawyer Can Help You in Your Back Taxes Dispute with the IRS

The IRS has online forms for people to apply for payment plans to help people with back taxes. However, these plans are not a one-size-fits-all solution for back taxes problems. They are designed to deal with relatively common situations and relatively small amounts of money owed. They are not appropriate for all taxpayers who owe back taxes.

In fact, there are many situations where it is highly advisable to retain a tax attorney to help guide you through your tax situation.

For instance, if you are facing an audit, an experienced tax attorney can help dramatically reduce your potential tax liability or even avoid it altogether. A tax attorney can serve as your negotiator with the IRS, thus leveling the playing field by pitting your experienced negotiator against those of the IRS.

Further, an attorney can help you in situations where the online payment plan applications provided by the IRS do not apply. An attorney can help steer the IRS away from inappropriate lines of inquiry and keep the focus on negotiating your tax debt.

An attorney experienced in dealing with the IRS will know the methods that work best and is unlikely to be intimidated by the IRS negotiators.

If You Have a Dispute about owing back taxes to the IRS in Georgia, You Should Contact Tax Attorney Jeff Cohen, Attorney at Law

If you owe back taxes to the IRS and are fighting collection efforts, you should seek legal advice. The IRS has more experience than you and will use that experience to get everything they can. An experienced advocate can help you reach a better agreement. To help you deal with the IRS, in the Atlanta or Marietta areas, contact tax attorney Jeff Cohen, Attorney at Law. You can call me at (404) 937-1414.