Tax Relief for Back Taxes Owed to the IRS
Back Taxes Owed To IRS are the unpaid taxes when the taxpayer has owed the money to the IRS over the tax year. IRS offers several tax debt relief programs to you when unable to pay the money to the government.
IRS tax debt is any amount of unpaid taxes owed to the government (Back Taxes Owed To IRS) after a tax return has been filed. The tax return can be filed late with a timely filed extension; however, any estimated balance owed must be paid by the April deadline.
What to Do if You Owe Back Taxes:
The IRS debt can be forgiven through some of the following structured resolution options for the taxpayer. They are:
Offer In Compromise:
paying less than the original tax owed: It helps to pay less amount of tax debt compared to the actual amount you owe. It is an agreement between the taxpayer and IRS. So, the taxpayer can have an installment payment option to clear the penalties and interests to the IRS.
Penalty Abatement:
It helps to reduce the tax liabilities to the taxpayers to avoid the penalties.
IRS Payment Plan:
It refers to paying off any outstanding tax debts to the IRS with an organized payment schedule plan over the due date.
PPIA (Partial Payment Installment Agreement):
It helps to pay the taxpayers back taxes as part of the total amount owed in installments as long as the total amount is paid before the required date with a specific payment option.
CNC (Currently Non-Collectible) Status:
IRS assigns CNC status, helps to put the taxpayer's financial condition in the hard status when the taxpayer is not able to pay their outstanding tax liabilities.
Innocent Spouse Relief or Injured Spouse Relief:
Most of the taxpayers get troubles themselves to pay the tax with IRS for spouse or ex-spouse; both individuals are responsible for all the taxes that they are Back Taxes Owed To IRS.
If you Back Taxes Owed To IRS, you can apply for any of the programs listed above. You must qualify and meet IRS requirements for Tax Relief to apply for these resolution programs. Generally, your current financial situation is a vital aspect that helps determine whether you are eligible for an IRS structured resolution program. The government will grant you relief for several years as long as you are in compliance and discontinue owing for future tax years.
Calculating the Cost of Tax Relief Resolution:
The average cost of hiring a tax resolution firm can range from $3,000 to $4,000 per case. However, this nominal fee can lead to resolving your tax debt. Many taxpayers have paid as little as 1% of Back Taxes Owed To IRS for their resolution. Anyone with IRS tax debt can go through the process of dealing with the IRS directly. However, this is not recommended. For optimal results, it is best to seek the help of tax professionals who are familiar with the tax laws, tax codes and have experience dealing with the IRS.
How Lifeback Tax Helps with Your Back Taxes Owed to IRS:
At LifeBack Tax, we help taxpayers and their families regain a fresh start with the IRS. File your tax return to avoid the taxes with the help of LifeBack Tax. Our clients have saved thousands of dollars in back taxes based on their financial circumstances and, finally, have their life back.
Owing IRS Back Taxes FAQs
Generally, the IRS is permitted by law to assess penalties for failure to pay taxes. “Back taxes”- defined as taxes not paid by the original filing due date- are subject to interest and a monthly late payment penalty. You can pay back taxes, or taxes owed, by paying the full or by setting up a payment plan with the IRS.
The IRS offers several payment options including
• Electronic payments
• Direct payments from your bank account, or credit and debit card payments.
• You can pay online or through the IRS2Go app available on the Google Play Store, the Apple App Store, or the Amazon Appstore. You can also pay by phone or online.
• If you do not have a bank account, you can pay with cash, by mail, or in person at an IRS office
Yes. If you owe back taxes, the IRS will keep your tax refund and apply it to your tax bill until it is paid in full. This applies even if you are on a payment plan. The tax refund is generally applied to the oldest year with the tax due balance.
10 years after the date of the assessment, subject to certain exceptions.
Possibly. An “offer in compromise” allows you to settle your debt with the IRS for less than the amount you owe.
Generally, yes. Ten years after the date of assessment, a statute of limitations called the “collection statute expiration date” requires the IRS to stop collection actions subject to certain exceptions.
It depends. To enter into an offer in compromise with a debtor, the IRS considers
(1) your future ability to pay
(2) your income
(3) your expenses
(4) your asset equity.
The IRS will approve an offer in compromise when the amount offered represents the most the IRS can expect to collect within a reasonable period of time.
The IRS Fresh Start program was created in 2011 to help struggling taxpayers and small businesses. The program was created to aid taxpayers struggling to pay their taxes with flexible Offer in Compromise terms.
It depends. If you enter into a payment plan agreement with the IRS to pay back taxes, your payment amount will be determined by the amount you owe, the time frame of the payment plans, interest, and penalties.
It is possible in certain cases to receive waiver of penalties. You may qualify for relief from penalties if you attempt to comply with IRS requirements but are unable to meet your financial obligation due to circumstances beyond your control.
Penalties eligible for waiver may include:
• Penalties for failure to file a tax return
• failure to pay on time
• failure to deposit taxes as required
If your penalties are reduced, the IRS will automatically reduce the interest owed. However, it should be noted that the IRS generally does not abate interest charges for reasonable cause or as first-time relief. Note: You can also apply to a streamlined payment plan or a partial payment plan. Some payment plan approvals may require the taxpayer to submit financials.
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