What should I do if I owe back taxes? (with photos)

An accountant can help an individual resolve complicated tax issues.

Back taxes are imposed on a national government due in previous years. As they were not paid on the due date, taxes will also incur interest and penalties until they are paid. We highly recommend dealing with back taxes as soon as possible because many tax agencies have the authority to impose liens and other actions against you, forcing you to pay your unpaid taxes.

Completing tax forms for the years when taxes were not paid can help you predict how much back taxes are due.

There are several reasons for back taxes to accumulate. Some taxpayers, for example, may not realize they owe taxes or may have received incorrect information. Some taxpayers simply do not file tax forms, while others choose to deliberately withhold their taxes. Both individuals and companies can be owed taxes, and the consequences can be very serious if taxes are not addressed.

If you owe back taxes, it’s better to contact the tax agency than to sit back and wait for them to approach you. Many tax agencies, such as the Internal Revenue Service (IRS) in the United States, will offer amnesty to taxpayers who demonstrate an intention to pay their unpaid taxes. Taxpayers who ask for help may be offered a payment plan or other assistance. If the tax agency has to send representatives, however, it can and will be unpleasant.

Generally, the best way to handle back taxes is to fill out the relevant tax forms for each year your taxes were not paid to determine how much money you owe, if any. The government may actually owe you money; many people who do not file a tax return have overpaid their taxes and are entitled to a refund. If your back taxes are complicated, you may want to hire an accountant to help you out. Choose an accountant who knows the tax law well, as he or she can help you negotiate with the tax agency.

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If you cannot pay your late taxes in a lump sum, apply for a payment plan. You should sit down and think about your budget and determine how much money you can afford to pay. By coming to the tax agency with a workable plan, you can impress them with your desire to fix the problem. Be aware that a tax agency may confiscate property, place liens on financial accounts and take other actions to recover money you owe them.

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