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Back Taxes Owed

back taxes owed

Owing Back Taxes

Owing back taxes (taxes that you did not pay when you owed them), is a position no one wants to be in, but one in which many Americans find themselves. The reasons someone ends up in this situation are varied, from mistakenly believing they do not have to file taxes to people who simply cannot pay what they owe or even to people who refuse to file.

Who has to File Taxes?

Regarding the first category of people, they are often not aware of how low the income requirement is to mandate filing taxes. If an individual makes as little as $400, they must file a tax return. Despite the category they are in, they need to know that the penalties for not paying taxes that are owed, are steep, including late fees and other financial penalties, tax levies, tax liens, and even incarceration/jail time.

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Taxes and Repayment

A tax levy is when the government seizes property and assets to pay for taxes owed. Essentially, it is a collection mechanism. A lien is a claim on your assets or property. Typically, a lien takes place first, as in the government claiming rights to the property and assets. Then a levy may follow, meaning the property is actually seized or taken to satisfy the debt owed.

We can Help You with Your Tax Problems

Obviously, these are all negative consequences that everyone hopes to avoid, and CPA Accounting & Tax Services can help. First, we can help you file your tax return on time; Second, if you do find yourself in this unfortunate situation, we can help you get caught up on the taxes you owe and avoid the steepest penalties. This article focuses on the second, help for those who owe back taxes, so let’s examine how we can help and why you shouldn’t go it alone.

There are only three options if you owe back taxes:

  • Pay what you owe in full, now. Assuming that is not an option for you, or you probably would not be in this predicament, let’s consider the second and third options.
  • You or a CPA or attorney can negotiate a payment plan with the IRS or
  • you or your CPA or attorney can request a reduced amount through something called an Offer in Compromise (OIC).

While option 3 sounds too good to be true- “Why would the IRS accept less than is owed?”- it is not. The IRS prefers a lump sum NOW over smaller amounts paid over time. Unfortunately, option 3 is rather difficult to obtain. In fact, only 20% or fewer of taxpayers who request an OIC, are approved. We know the tax laws and qualifications for this type of request and can analyze your situation, then recommend the right option for you.

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