Tax Debt Basics and Information

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More people than you think don’t pay their taxes for one reason or any other.

There are many reasons why people don’t pay their federal or state taxes, but having unfiled or unpaid taxes or mistakes on your returns could lead to a financial nightmare.

If you’re trying to get out from under your tax debt, the first thing you might want to do is to figure out how much you owe, including any penalties, fines, and interest.

Knowing how much you owe, how much you can afford to pay back, and what your options are is very important, but it can quickly get confusing. A tax attorney can be a vital resource when trying to figure out your tax debt options or seeking relief from the IRS .

Arrange a free consultation with a tax attorney near you. Fill out the free evaluation form and speak to a tax lawyer today.

Tax Debt Penalties

Many people get in trouble with the IRS for either not paying their income tax bill, or never filing a tax return in the first place.

The amount of taxes you owe or the refund you’re due will depend on several factors, including: your gross income, your filing status, how many dependents you have and whether you qualify for any exemptions or deductions.

There are a variety of tax penalties that can be imposed when you fail to file your federal or state tax returns. Unfiled taxes could potentially result in:

  • No refund or No losses carry over: Not paying your taxes could result in not receiving your refund and not having your losses carry over. You typically have about three years to file your taxes returns before you will be ineligible to receive your refund.
  • Substitute Return Consequences: The IRS can file a “substitute return”, which allows them to calculate how much you owe them and may not include deductions and exemptions you’d be entitled to otherwise.
  • Loss of tax credits: If you qualify for any type of tax credits and have not filed with the three years you may lose your ability to qualify for them.
  • Can’t qualify to file for bankruptcy: If you have unfiled tax returns, you likely cannot file Chapter 7 or Chapter 13 bankruptcy. You typically need at least 2 years of tax returns filed before you file Chapter 7 bankruptcy and at least 4 years of returns to file Chapter 13.
  • Criminal fines and Jail time: In some cases you could face either a $25,000 criminal fine or 1 year of incarceration
  • Tax Collection/Tax lien/Tax levy: These are different collection mechanisms that the IRS could impose on you to collect the taxes you owe, which may allow the IRS to seize your home, car, or other assets.

Besides penalties, there is interest that can be added to the amount you owe. Depending on how late you file and how late your payments are, the interest may substantially increase your total tax bill.

A tax attorney can explain the penalties you may be facing and help you determine the best option of repayment while negotiating with the IRS or the state on your behalf.

Speak with a Tax Attorney About your IRS Options

Having tax problems and dealing with the IRS can be tough but talking with a participating tax lawyer in your area and knowing your options could make the process easier.

Don’t be intimidated by the IRS or state revenue department. A tax attorney can help you prepare for federal or state tax audits , advise you on your options for repayment, and may help you reach a settlement to avoid extra penalties, liens, wage garnishments, or even jail time.

Find help today. Simply fill out the form below for a free consultation with a local tax attorney.