Back taxes can be the stuff of nightmares as they can trigger severe tax collection processes, including liens, wage garnishments, and levies. While the IRS recommends clearing back taxes at the earliest, you may also opt for provisions that are available under the Fresh Start Initiative (FSI). One of the provisions is the IRS offer in compromise (OIC), which is a monetary concession that allows the IRS and taxpayers to settle unpaid dues for less than what is owed. Requesting for an OIC requires taxpayers to comply with intricate eligibility criteria, which is why it is advisable to consult a Dallas-based tax attorney. That said, continue reading as we discuss a concise guide to paying back taxes.
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Steps to follow if you owe back taxes
Back taxes are unpaid (partially or fully) taxes from previous financial years. After receiving a notice from the IRS about such taxes, you need to follow these steps:
- Check for any discrepancies or errors in returns: Generally, tax returns are a reflection of your financial status, meaning if your earnings are almost the same from the last year, ideally there shouldn’t be any changes in the tax return. It is also advisable to check for any deductions and credits that you might be eligible for and then respond accordingly.
- Reduce your penalties: Requesting provisions that help reduce additional penalties is one of the vital steps when dealing with back taxes. This can be achieved by requesting a first-time waiver, filing an extension, Currently non-collectible status, or seeking IRS penalty abatement.
- Formulate a payment plan: As stated earlier, based on the eligibility criteria, taxpayers can choose the right payment plan from the IRS Installment Agreement and the IRS Offer in Compromise.
Determining eligibility for the provisions under the FSI comes with several legal complexities, which is why it is advisable to consult a debt attorney to help you chart the best possible way.
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Mistakes to avoid if you owe back taxes
When it comes to back taxes, even a slight mistake (intentional or unintentional) can trigger serious tax collection procedures. Common mistakes to avoid include:
- Not paying taxes: As a taxpayer, it goes without saying that not paying taxes will only land you in serious trouble. This includes ‘failure to file’ & ‘failure to pay’.
- Not knowing your options: The IRS provides several tax help options such as the IRS offer in compromise, penalty abatement, and payment agreement to help taxpayers conveniently. The only way you can find a resolution to your IRS problem is first knowing your options.
Need help? Consult an IRS tax attorney
When it comes to dealing with back taxes, it is always advisable to act sooner rather than later. From interpreting the notice correctly to responding with the right documents and requesting a payment plan, it is advisable to hire a tax attorney that can help you navigate the legalities. When looking to consult a Dallas tax attorney, look no further than the Law Offices of Nick Nemeth. We are a leading name when it comes to providing comprehensive tax solutions for all types of IRS tax problems. To discuss your requirements, call (972) 426-2553. Alternatively, you can fill out our contact form.