If you received a shocking letter from the IRS stating you owe back taxes from previous tax years or accidentally failed to file a few years of 1040 tax returns, it can feel overwhelming trying to deal with these tax debts on your own. Thankfully, you can get tax help for back taxes from experts that make the process manageable.
Our tax relief firm provides the professional assistance and representation you need to:
- Understand why you owe back income taxes
- Explore affordable options to become current
- Set up installment plans or settle for less than you owe
- Stop stressful IRS collection activities
Top Reasons Why People Owe the IRS Back Taxes
There are various reasons you may suddenly get hit with a bill or audit notice for back taxes, including:
• Errors Calculating Tax Liability – Accidentally claiming credits/deductions you don’t qualify for or providing inaccurate information triggers IRS corrections leading to additional tax assessments. Tax code complexity causes many mistakes.
• Failure to File/Report Extra Income – If you fail to file annual tax returns or report cash/side income, the IRS eventually will prepare substitute returns calculating taxes owed based on income information received from employers, banks and other sources.
• Job Loss or Financial Hardship – Losing a job and lacking funds to pay taxes or abrupt life emergencies can make it impossible to fully pay annual tax bills even when returns are filed.
• Retirement Withdrawals and IRA Issues – Premature withdrawals or excess contributions related to IRAs or 401ks often generate tax bills not paid upfront. Some retirees also underestimate taxes due on Social Security benefits and retirement account withdrawals.
Warning Signs the IRS Wants You to Pay Back Taxes
The first indication of IRS action related to back taxes usually involves receiving one of these notices:
• CP14 Notice – Informs you of balance due for prior year taxes within 21 days of notice date
• CP501 Notice – Demands payment of overdue taxes within 30 days to avoid additional penalties/interest
• CP503 Notice – Urgent notice of IRS intent to levy if 10 day balance due isn’t resolved
• Statutory Notice of Deficiency – Special letter legally giving you 90 days to challenge an IRS calculation of back taxes owed before a court proceeding.
If you fail to respond quickly and fully pay the balances demanded, the IRS will escalate collection activities making your tax problem much worse over time.
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Getting Tax Help For Owed Back Taxes: Key Action Steps
If you receive a letter demanding payment for back taxes or realize you failed to file returns for previous years, key steps to limit penalties and get back into compliance include:
1. Gather Past Tax Documents
Collect employer forms, investment statements, deductions data and anything else relevant to calculating taxes owed for the years involved. Thorough records enable accurately amending past returns.
2. Request Record of Prior Filings
Call the IRS at 800-908-9946 to officially request detailed records showing the tax forms and information the IRS has received related to you over the years. These Transcripts reveal if anything reported to the IRS differs from your actual filing history.
3. Amend Incorrect Past Returns
If records reveal you claimed deductions incorrectly, failed to report all taxable income or made other substantive errors, you can amend past returns to correct tax liability. Form 1040X must be filed to change an old 1040.
4. File Any Missing Annual Returns
If records show you failed to file returns for certain years, you must complete the applicable 1040 forms reporting all income/deductions and calculate taxes due. Delinquent returns should be sent certified mail with tracking to prove the IRS received them.
5. Seek Professional Help With Back Tax Returns
Trying to recreate accurate past returns from incomplete records while navigating complex IRS rules is extremely difficult. Enlisting expert tax help from a reputable tax relief firm like Tax Help Attorneys saves time, reduces stress and leverages specialized expertise to get you the best outcome when dealing with the IRS. Most reputable tax experts offer free consultations to assess your situation, just be aware of scammers.
Affordable Tax Relief Options For Back Taxes
Once you’ve determined precisely what you owe for prior years, explore these options to resolve back tax bills you can’t fully pay at once:
File Currently Not Collectible Status
If you prove unable to ever pay back taxes owed based on low income and minimal assets, filing IRS Form 433-F requests the IRS designate you Currently Not Collectible status stopping enforced collections. Interest and penalties continue growing during this time however.
Request an IRS Installment Agreement
IRS Form 9465 allows you to set up monthly payment plans stretching up to 72 months based on what you can afford. Required minimums vary based on tax debt age and amount owed. Interest and penalties continue accruing but the IRS will not pursue active collections while you make payments.
Submit an IRS Offer in Compromise
IRS Form 656 is an Offer in Compromise allowing you to settle tax debts for less than the full amount due based on inability to pay. Despite advertisements stating otherwise, the eligibility rules for approval are extremely strict and require proving you lack income and assets now and in the future to fully pay what you owe across the 10 year collectible period. As a result, very few Offers in Compromise submissions are accepted. Your best chance is having a tax relief attorney prepare the strongest case possible on your behalf. If accepted, the IRS agrees to forgive a portion of tax, penalties and interest owed.
Pursue Innocent / Injured Spouse Relief
If tax issues creating back taxes owed involve a former spouse or partner, IRS Form 8857 lets you request your share of a joint tax liability from prior years be eliminated. You must prove either you didn’t know about the tax situation, didn’t benefit from funds not paid to taxes or meet other specialized criteria.
Explore Other IRS Settlement Programs
Other lesser known tax relief programs may apply to your situation including Penalty Abatement Requests, Injured Spouse Claims and Doubt as to Liability Offers. The IRS analyzes each case individually.
Why Enlisting Professional Tax Help For Back Taxes is Vital
Navigating back tax resolution options involves submitting time sensitive requests and IRS forms under strict guidelines while communicating with the agency across different departments. Tax professionals understand regulations inside and out. Their expertise streamlines resolving past due tax situations.Benefits of expert tax help for back taxes includes:
- Accurately Calculating Total Tax Liability Due – Reconstruction of what you owe across prior years adhering to all IRS rules is infinitely smoother working with an experienced tax relief firm. They ensure you pay only what is actually owed based on taxes already paid, deductions legally claimed etc. so your rights are protected.
- Determining Realistic Payment Plans – Tax pros forecast your future financial situation when negotiating affordable installment plans or proving why you qualify to settle for less than you owe under an Offer in Compromise. Their financial analysis expertise strengthens your case.
- Pinpointing Top Settlement Options – Myriad technical details determine which tax relief programs you are eligible for based on personal factors like marital status, age, income fluctuations, etc. Skilled tax experts identify your optimal paths forward.
- Presenting Your Case Powerfully – Seasoned tax help professionals wield negotiating experience securing IRS program approvals at the maximum relief amount. Their polished communications with the IRS contrast against tense exchanges from distressed individual taxpayers anxiously representing themselves.
Take Control of Your Tax Relief Today
If you or your business need tax help related to assessed back taxes from prior years, the dedicated specialists at our tax relief firm will fight to resolve your situation for less than you owe and stop stressful IRS collection efforts in their tracks. Contact us today for a free consultation focused on the tax help you need most!
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