IRS Back Taxes And Ways To Pay Them

The IRS (Internal Revenue Service) comes under the United States Department of Treasury. It provides professional help regarding all income tax related issues. Through guidelines obtained from the IRS, back taxes problems can be resolved.

There are various other complications regarding the taxation procedure other than back taxes. They, and other similar things, can be handled by the IRS. If you are not sure of any particular thing, then you can approach the IRS for help.

Back taxes are tax debts. These are unpaid taxes which were assessed by the government against a tax payer who didnÂ't pay the government. The IRS assesses these back taxes in three ways. Firstly, if the person files for federal income tax return but is not able to pay the tax on the due date, results in a back tax. In this case IRS resolves the problem and processes the return. The taxpayer pays the back taxes plus the penalties to the IRS.

The second case can arise even if the person has filed for and paid the income tax return. This happens because the person fails to account for all the income that the person earned in the concerned year of taxation. The IRS keeps a track of this and the taxpayer in this case may have to face an under reporting issue if he does not act promptly.

In the third case, the back tax is assessed when the tax payer does not file for a tax return. In this case the IRS files the return on behalf of the person. This is known as the Substitute for Returns. Here the tax payed by the tax payer is at a much higher rate than the rate which should originally be paid if he had filed the return. If this remains unpaid this becomes back taxes.

There are various ways in which the IRS back tax issues can be resolved. The tax payer can pay the taxes by paying them in full with their Full Pay Service. The taxes can also be paid through the Installment Agreement process. Here, if the person cannot afford to pay it all together, he can pay them in installments. The third process is establishing the Currently Not Collectible status. Here the person will have to prove that the living expenses can exceed monthly income.

The Offer in Compromise is another service by the IRS. Here, it should be proved that even if all the assets are forcibly sold by the IRS, the taxes cannot be collected. However, the IRS only considers the Offer in Compromise and Currently Not Collectible if the taxpayer has already filed for the necessary federal income tax returns.

The IRS has ten years to collect back taxes. But in case of bankruptcy, this time frame can be extended. However, it is essential that the person qualifies for bankruptcy. Thus, to ensure that back taxes have expired or not, it is best if consulted with an attorney. They provide with necessary updates and help in resolving IRS back taxes. The IRS has also provided online services that can be of some help to you.