IRS Back Taxes
How to Cope With Unfiled Tax Returns
The Internal Revenue Service can knock on your door sooner or later, if you have a few years’ worth of unfiled federal tax returns. Dealing with the IRS back taxes can be a daunting, frightening and confusing experience. However, there are many ways to combat such an eventuality.
Below are some important points to keep in mind.
There Will Be Consequences
One of the many reasons most people fail to file their tax returns is because they can’t afford to pay taxes owed. The consequences for not filing at all, however are often much worse as the penalties for unfiled tax returns grow much quicker. As the IRS has the legal right to fine a taxpayer as much $25,000 for every unfiled tax return, making them vulnerable to earn up to a year in prison for each unfiled return as well. Fortunately, the IRS does not exercise this option and reserves it for high-profile cases that involve celebrities to make examples out of them. Those few rank and file Americans owing the IRS back taxes will be incarcerated or fined $25,000 for a few thousand dollars’ worth of unpaid taxes.
File Old Tax Returns as Quickly As Possible
The unfiled tax returns require immediate filing as quickly as humanly possible – it’s the only way to square yourself with the IRS. There’s, however a silver lining in filling those returns: it’s usually quick and painless, owing largely to the fact that it only involves sending in the missing documentation ,to the address listed for tax return or in some situations, the address sent by the IRS in one of those friendly letters “requesting” your valuable information. Since the IRS will not forget the amount of money you owe any time soon, you can ignore sending in the money you owe to the federal government at thesame time.
After you do get those tax returns in, it’s a perfect tome to have a frank and open discussion with the IRS about a plan for paying what you owe. The federal tax collector certainly knows that it’s unrealistic for all but the most affluent Americans to be able to pay their taxes back all at once. This can enable you to rise and strike a deal with the IRS to offer an installment plan and let you make more manageable monthly payments. You can also opt for applying an offer in compromise, willing to pay a percentage of what youf owe immediately in exchange for the dismissal of the rest of your debt. In addition to this, you also have a choice to declare yourself uncollectable by the tax agency, which will put any payments on hold for a year or two. The IRS can periodically check back with you to understand if you are in a better position to repay your debts.