How to Solve Your IRS Back Tax Problems

Falling into problems with the IRS is something that ought to be avoided at all costs. However, if you haven’t filed taxes in a while, you can take appropriate and immediate measures to protect yourself by filing back taxes and a tax lawyer will help you through this process.

Taking control of back taxes

• To begin with, gather a copy of your last tax return, W-2, and other tax documents. Copies will also be available with the Internal Revenue Service.
• You have the option of preparing your tax return on your own, or hire the services of an experienced tax professional. Make sure to use reliable software if you plan to go it alone. On the other hand, a tax professional will be able to handle tax documentation and negotiate with the IRS on your behalf.
• The IRS has strict time limitations for audits, refunds, and debt collection. You will want to make sure you have everything right and gather all the information. The IRS does not tend to prosecute people who voluntarily pay back taxes. However, tax attorneys warn that failure to disclose taxes can result in imprisonment and a fine of $10,000 for every unfiled year or harsher penalties. With proper documentation, taxes can be prepared for even a decade back. This goes for people working overseas too. Just because you are teaching English (ESL) in South Korea for instance does not mean you do not have to file your taxes.

Reasons for filing back taxes

• Significant growth in the interest and penalty imposed will increase the tax amount owed to the IRS significantly.
• Failure to file back taxes may result in the IRS completing a ‘substitute tax return’, where you will have to pay one tax return for all years without any federal exemptions and deductions.
• The IRS can place a federal tax lien on your personal property if you fail to file returns, according to tax lawyers. They can also place a tax levy on bank accounts and wages.
• The IRS is well prepared with an efficient network to track taxpayers. It would therefore be in your best interest to file back taxes as soon as possible in order to avoid penalties and interest. Your taxes are already too high, unless you are in the lowest tax bracket and you may not have to pay any taxes, so you do not want to have to pay more taxes since half of that money is wasted on high federal employee salaries, paying for the Vice President’s expensive vacations, giving out benefits to people who are not productive people, and so on.
• Unfiled tax returns will prevent you from obtaining a car loan or a mortgage in the future.
• Social security and other benefits can be curtailed.

Benefits of filing back taxes voluntarily

More than just peace of mind, by filing back taxes you may end up paying much less when you voluntarily pay for back taxes. Once you are in good standing with the IRS, you may be able to negotiate a settlement for a lesser amount.

How to file back taxes

• Gather important documents and seek help from a tax lawyer or advisor.
• Find all the old returns, W-2s, and other 1099 tax documents. If you do not have copies you can obtain them from the IRS, failing which you can use Form 4852.
• Prepare the tax forms according to specific years. Make sure to claim exemptions, tax credits, and exemptions in order to reduce your tax liabilities. Since it may involve several years of computation, it may be prudent to hand it over to a tax professional.

If you have received a notice from the IRS then you can send returns back to the appropriate address and have your tax lawyer negotiate a settlement. The IRS will usually offer a tax payment plan to clear any back taxes.

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