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Tax Trouble: How to File Back Taxes

Updated on April 24, 2015
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How to File Back Taxes

Taxes. There probably isn’t a more hated word in any language in the world. Even though taxes are (usually) used by the government to give us services, no one likes paying them. Paying taxes, though, is not an option – it’s the law. If you are in the United States, the law is enforced by the Internal Revenue Service – the hated IRS. The IRS isn’t evil, though. They’re actually willing to work with you, especially if you owe back taxes.

If you need to know how to pay back taxes to the IRS, then this article is for you. Keep in mind that this article does not offer legal advice and should not be taken in lieu of trained legal counsel from a tax attorney.



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How to File Back Taxes: Tax Evasion Seeking Legal Advice

Back taxes are basically taxes that you owe but have not paid. You can get away with back taxes; many people do every year by just not paying taxes and hoping that they do not get audited (investigated) by the IRS. The IRS audits anywhere from 2-3% of the tax-paying population per year, and that percentage will only increase. So, while they may not ever find out, if they do, you could be charged with tax evasion, a federal crime.

The penalty for tax evasion per year can be as high as $25,000 and being sentenced to jail for one year. If the IRS determines that you intentionally chose to not pay your taxes, you can be sent to prison for up to five years on a felony and fined up to $100,000. For this reason, tax evasion is not recommended, to say the least.

Should you find yourself behind in your taxes, and want to avoid tax evasion charges, what should you do? I strongly recommend finding competent legal advice from qualified tax attorneys. These lawyers specialize in tax law and can help you every step of the way – from initial counsel to paying back the taxes to negotiating with the IRS, if necessary.


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How to File Back Taxes: The Process

If you have back taxes because you can’t pay, you are in good company. Approximately 19% of Americans have back taxes. So what happens when the IRS finds out that you haven’t paid? They will typically send you an automated notification letter. This letter tells you how much you owe and where to send your money. Most importantly, though, they give you contact information if you want to appeal the tax claim or talk to an IRS representative.

At this point, you should get a lawyer. Barring that, though, a failure to respond will result in more, harsher letters. If you fail to pay, you can be subjected to a tax lien on your property and possibly that harsh punishment described above.

But, we’re assuming you want to avoid that. You have several options. You could send the IRS a check for the back taxes – plus any interest that the IRS declares you to have accumulated. You could also work out a payment plan with the IRS if you can’t pay. They will charge interest, but won’t force you to pay the full amount. You could also – preferably with a lawyer – negotiate with the IRS and get an “offer in compromise”. This is basically an amount, usually much lower than your actual debt, that you promise to pay either in one installment or in several. If you can prove that you don’t have enough money to pay off the debt now or in the foreseeable future, the IRS generally will prefer to get some money from you rather than none at all.


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