Filing late back taxes can be compared to the snowball effect; gradually growing and increasing over time before becoming destructive.  Unfortunately, so many individuals tend to overlook the consequences in unfiled back taxes along with the power of the IRS when making their tax filing decisions. Once one is late on filing back taxes, it becomes very easy to fall into the cycle of taking no action; however, taking the simple and proper measures to remedy the situation can save a lot of money, time, and stress.

Filing your late back taxes: The Process:

1. Gather the proper documents. These documents include:
   • Old W-2 forms from employer(s) (or form 4852 in their place)
   • 1099 Tax Documents
   • Bank statements
2. Find and prepare missed tax forms
   • Visit the IRS webpage or a local tax resolution firm to find the tax return form (1040 Form)
   • Separate each year’s documents with their corresponding tax form (you need one per every year missed)
   • Claim all deductions, exemptions, and credits (this will help in reducing your liabilities)
3. Seek assistance
   • If the process feels overwhelming, which is very well may be, do not hesitate to find help
   • There are numerous tax services that will make the process simple and easy for you. Tax professionals will guarantee a thorough and accurate job, while also working to solidify the best return for you.
   • Tax professionals can also significantly help with lowering your balance, by securing more deductions, reducing penalties, or working with the IRS to create a payment plan
4. Sign and complete your forms
   • Be sure to review your forms and information
   • Locate the sending address of your notice
   • Address the envelope and send the forms to your local IRS office with the payments included
   • If you cannot pay in full, pay as much as you can
   • If you cannot pay at all, it is important to still send the file
5. Work with your tax professional
   • Once you have sent in your returns, continue to work with your professional in settling the amount owed and filing your next return

Sill avoiding filing your late back taxes?  Let’s take a look at what the IRS can do to you.

1. First, penalties and interest will increasingly begin to grow on the amount owed
2. Next, The IRS may complete a “Substitute for Return,” which combines all missed years into one tax return, and therefore eliminates all chances of federal exemptions or expenses being taken from the amount
3. After that, the IRS will find you, eventually, no questions asked
4. When the IRS does find you, they will begin to take collections
5. Finally, the IRS may place a tax levy on your bank accounts, or even a federal tax lien on your personal property

Needless to say, it is a good idea to file your late back taxes as soon as you can. Realizing the consequences of waiting any longer, follow the aforementioned steps and begin the process now.

Related posts:

1. File Late Tax Returns to Take Control of Your Back Taxes
2. How to Handle Filing IRS Back Taxes
3. When to File a Late Tax Return or Request a Tax Extension

Once the IRS gets wind of the fact that you failed to pay your taxes the their collection process starts. The IRS collection process is a very automated process and it is starts with being subtle about what is owed and will continue to get harsher and harsher until your taxes have been paid or enough assets have been seized to fulfill the outstanding tax liability. This collection process is very similar for most individuals but it can deviate course a bit depending upon your assets, financial situation, and past run ins with the IRS. Below are the standard steps the IRS collection system will follow.

1. Receive Series of Tax Assessment Letters: These letters will start off by simply stating what you owe in taxes and that you must pay. Each letter following the original will get a bit harsher in tone and a bit more threatening each time. Each time an IRS letter goes ignored you can expect the IRS to increase the severity of their next letter or action. Typically you will receive about 4 different letters that assess tax amounts owed before any actual action is taken by the IRS. These threatening letters will last for a period of 4-6 months before the IRS moves to their next collection tactic.
2. Receive an Notice of Federal Tax Lien: A tax lien gives the IRS legal claim to your assets in order to secure payment. This should not be taken lightly because it is very unlikely you will be able to get any company to lend you money since the IRS has first dibs on proceeds from your assets over other creditors. Many people do ignore the tax lien because it may not effect their everyday life, but if you continue to ignore it you can be assured the IRS will move to a harsher collection mechanism. (Sometimes this step can be skipped and the IRS moves right to #3 if they are dealing with a lot of money or think they are dealing with a very unresponsive taxpayer)
3. Receive notice of intent to levy: A tax levy is the final collection mechanism used by the IRS where they will forcefully seize your assets against your will. Once they issue a tax levy they have already labeled you as an unresponsive taxpayer and take collections into their own hands since you have failed to work with them to pay back the taxes. The IRS has several levy methods they use and they will choose the one that is easiest for them to collect taxes. The three forms of levy they will use are the following:
   • Wage Levy: They will contact your employer and require that they withhold amounts from your paycheck in order to pay down the tax liability.
   • Bank Levy: The IRS will contact your bank and require that they freeze funds in their in order for them to seize what funds are in there to satisfy the tax liability.
   • Asset Seizure: The IRS will seize assets of yours and sell them in order to satisfy the outstanding tax liability.

As you can see the IRS will not stop until they get what is owed to them. Hiding from the IRS and trying to prevent them from getting the taxes owed is extremely difficult. If you cannot pay your taxes it is a good idea to work with the IRS and pay back the taxes you owe on your terms instead of on their terms.

Related posts:

1. Tax Services: Use a Large, Nationwide Firm or Small Local Firm?
2. Federal Tax Levy: Steps to Resolution with the IRS
3. Importance of Paying Your Installment Agreement On Time

Sinbad has had several tax liens placed on his assets for taxes he has owed since 1998. The IRS wants to begin to levy Sinbad’s assets but it seems he is doing a good job at keeping assets out of his name in order to prevent this. One example is a $1.5 million home in California that is registered under his brother’s name, but all payments made towards the home are made by Sinbad’s company or his own personal checks.

Look for more updates on this actor because there seems to be some fishy situations going on here and owing this much in federal back taxes will not be overlooked or taken lightly. The IRS is known for making examples out of famous people in order to scare others into paying their taxes. This possibly could be one of those cases.

Sinbad Stand-up Comedy

Related posts:

1. Chris Tucker Owes $3.6 Million in Back Taxes
2. Stephen Baldwin Owes $1.084 Million in Back Taxes
3. Nas Owes the IRS $2.5 Million in Back Taxes