Back taxes and tax debt

If you’re getting letters from the IRS about your tax debt, you probably have a lot of questions about what to do next and how to handle paying the IRS. We have answers! Read on to learn more about your options and where you can turn for help when paying your back taxes.

Back taxes are simply money that you owe to the Internal Revenue Service. When you don’t pay your taxes or pay the wrong amount, you owe “back taxes.” If you continue to miss payments, you have “tax debt” that the IRS will try to collect.

When taxpayers owe the IRS and are not in an arrangement to pay or defer the tax liability (via extension to pay, payment plan, currently not collectible status, or an offer in compromise), they can be subject to a levy of income and assets. 

If you're missing records that you need to file your taxes, this can complicate and delay the process of catching up on your tax returns. Here's what you can do if your records are missing and you want to file your back taxes with minimal delays.

In short, yes, you can. Having tax debt, also called back taxes, does not preclude you from qualifying for a mortgage by sheer virtue of having it. The long answer is that whether or not you will get the mortgage has less to do with the IRS, and more to do with the lender's guidelines.

You can contact the IRS by phone, mail, or walking in/making an appointment at a local Taxpayer Assistance Center. The IRS typically does not email taxpayers.

When you receive a tax bill, it’s important to take some form of action regardless of whether you agree with the assessment or have the means to pay. Ignoring the bill is never a good idea because the IRS starts the countdown for their collections process.

The good news? Tax debt relief is possible. The not-so-good news? Not everyone qualifies for a settlement, but there are several options to explore and consider. The IRS offers a variety of tax debt relief programs and a lot of online tools and forms to make it easier to apply for them.

Each year, millions of taxpayers set up an IRS payment plan when they cannot pay what’s owed upon filing their returns. IRS statistics show that over 70% use one of these payment plans.

You might have heard about how it is possible to settle your IRS tax debt for less than the actual amount you owe. While it is not possible to get the IRS to let you off easily, there are some circumstances where you might be able to work out an Offer in Compromise (OIC).

Many taxpayers who owe back taxes to IRS still hear about the IRS “Fresh Start” Initiative on the airwaves. Many advertisements also tout Fresh Start as an opportunity to settle back taxes with the IRS.

IRS penalty abatement can be done in a phone call to the IRS but can take years in certain cases. It typically depends on the type of penalty and relief that you are seeking.

The Internal Revenue Service (IRS) has a variety of options to satisfy delinquent debts owed by taxpayers. Some of its more infamous options include federal liens, wage garnishment, refund offsets, and levies.

For richer and for poorer? Absolutely, and when it comes Innocent Spouse Relief, even divorce and a court decree may not stop the IRS from pursuing unpaid taxes.

During the IRS COVID-19 shutdown, the IRS got kinder to high-tax debtors. The IRS announced a new payment plan that now allows tax debtors who owe up to $250,000 to pay on easier terms. The best feature of this new payment plan is that it is very easy to set up with the IRS.

IRS levies are issued against taxpayers who have been given the chance to pay their debts and have not paid or secured a collection alternative. Most IRS levies are issued by an automated collection system (systemic levies).

Millions of taxpayers each year cannot pay their taxes. In 2019, there were 16.8 million individual taxpayers who owed the IRS. Each year, between 4-5 million taxpayers have to get an installment agreement, extension to pay, or another more complicated IRS collection alternative to full payment.

If you cannot pay your taxes, the IRS may put you in currently not collectible status (“CNC” or “Status 53”). What this means is that you cannot pay now, but you may be able to pay later.