I owe back taxes. What are my options?

March 23, 2020 by Glynis Miller, CPA, MST
Back Taxes written on a computer screen

When you owe back taxes, the obvious option is just simply to pay whatever you owe in full and be done with it. While simple, in theory, it may not be that easy. Or even what is best for you. Why? The IRS assessment may be incorrect due to errors or missing information. Or, you may be able to settle for less than you owe. And of course, you may not have the money to pay them the amount owed. However, you may not know where to start, or you might fear taking matters into your own hands. Fear of the unknown will often leave one standing in their tracks, unable to move forward, even when going backward is not an option! Yet, doing nothing will not solve the problem.

It is totally understandable that owing a debt is stressful, but owing the IRS back taxes? Oh my, now that is a big stress. One of the biggest fears a taxpayer may have is to face a debt owed to the IRS and dealing with them to resolve it. But why is it so stressful? Well, as noted, the unknown can stop us from doing anything.

So, if you owe back taxes, there are options to resolve your back taxes, and TaxAudit can help. Here are a few possible options:
 

  1. Audit Reconsideration – Is that balance correct?
    1. If you were audited by the IRS and did not get a chance to respond, the notice could be incorrect. Requesting an “Audit Reconsideration” might be the option for you. Even though the IRS has closed the case if new information can be provided, a reconsideration of the assessment can be done.
    2. Maybe, you failed to file a tax return one year, and now the IRS sent you a bill. Submitting a complete return with all of your correct income, deductions, and credits for an audit reconsideration might be warranted.
  2. Offer in Compromise – Able to pay, but not the full amount?
    1. Possibly, you owe for several years, and now your finances have taken a big hit, too. Someone in that situation might benefit from an Offer in Compromise. In an offer in compromise, your financial status is taken into consideration to determine how much you can pay. It is possible that after a review of your finances, the IRS is willing to accept less than the full amount you owe to settle your account.
  3. Installment Agreement – Able to pay, but not all at once?
    1. Perhaps if you could make payments, you would be able to pay the balance owed.

These are just a few of the options available to resolve issues with back taxes. Keep in mind that all options are not created equally. In other words, what works for one taxpayer may not work for you. The goal of the IRS is to collect the taxes due, and thus various options are available to taxpayers. Whether it be an installment agreement, audit reconsideration, offer in compromise, or penalty abatement, TaxAudit has a specialist that can work with you to determine the best course of action for your circumstances.

Do you owe money to the IRS or State?

Get Professional Help Now!

Recent Articles

IRS check with money surrounding it and 1040 form
A large tax refund alone will not necessarily generate a tax audit, but if the reason why you received a large refund is questionable the IRS may peek closely.
Woman Reading Letter
Taxpayers receive an IRS CP503 because they have an unpaid tax debt. This is the 2nd notice the IRS sends taxpayers that they have an outstanding balance due.
woman helping elderly woman
You can likely deduct your out-of-pocket assisted living expenses on your Form 1040 tax return. But, as always, there are some conditions that have to be met.
Father sitting on a couch next to adult son looking at a tablet
As with most tax questions, the answer to this question can be a little complicated. Dependent adult children will fall into one of two categories.
This blog does not provide legal, financial, accounting, or tax advice. The content on this blog is “as is” and carries no warranties. TaxAudit does not warrant or guarantee the accuracy, reliability, and completeness of the content of this blog. Content may become out of date as tax laws change. TaxAudit may, but has no obligation to monitor or respond to comments.