Typically, problems with back taxes arise from not paying the total amount of taxes owed on your federal and/or state returns. Also, IRS tax problems with back taxes can arise from not filing taxes your taxes as well. Once the IRS or state determines that you do indeed owe more money to the government then it will proceed to take actions against you. Below is a list of problems/actions the government and state takes against individuals and sometimes businesses. Items are somewhat in order of how the IRS proceeds to take action.
If you have unpaid back taxes and the IRS or state has not yet taken action against you. Find out what you can likely expect next and what actions you should take now to prevent future issues from arising.
Understand your IRS notices and letters you received. Know what they mean and what actions you must take to resolve the IRS problem in question.
This is the first major collection action the IRS taxes against individuals to ensure the collection of back taxes. A Tax Lien gives the IRS a legal claim to your property as security or payment for your tax liability. It is used in order to protect the government’s interest in your assets.
This is the most powerful weapon that the IRS has. The IRS will send out a 30-day notice of its intent to levy and then it will begin to seize assets until all tax liabilities have been recovered. The IRS can take your house, wages, savings, 401K, and any other assets that it can liquidate.
IRS wage garnishment is the most common form of tax levy. Understand how wage garnishment works, what can be done to stop it or negate the effects of the levy and understand why getting wage garnishment help from a professional is a good idea.
An IRS bank levy can be one of the harshest collection mechanisms used by the IRS. The IRS can legally go into your bank account and take your money in order to satisfy unpaid IRS taxes. Understand how the IRS bank levy process works, what can be done to stop it and what professional services are offered to help.
An audit is a process in which the IRS determines if you have properly reported all income and took the correct deductions. It is your responsibility to prove to the IRS that what you filed was indeed correct and you must provide supporting documents for the majority of it.
The IRS uses penalties as a way to scare taxpayers into staying in compliance with their taxes. They actually have about 140+ tax penalties and if you do anything wrong, you can be assured the IRS will be issuing you a penalty. Understand the various penalties and know how they can be removed if you meet the right qualifications.
If you are audited, owe more money, and cannot pay, you need to know your options. It is safe to say that you know you will have to pay the money in one way or the next. The question is: how are you going to do this if you do not have the money you need right now?
Unpaid taxes are one of the root causes of most tax problems. Understand the various options you have when resolving unpaid taxes. The method you pick should be based upon your unique financial and tax situation.
Taxes for small businesses are extremely complex and the problems that arise from tax problems can be devastating to a business. Here are some of the most common tax problems small businesses should avoid. (Trust fund recovery penalty, tax deduction issues, delinquent payroll taxes and more)
If you settled, canceled or had liability forgiven, you could end up owing the IRS or State. Here are the details on how canceled liability works.
Dealing with early 401k withdrawals and preparing for the tax consequences. What to do if you didn’t take into account the tax implications.
Tax evasion is when a person, company, or other entity uses illegal means to avoid paying taxes. See specific examples of tax evasion and how to identify. The penalties associated with evasion are some of the harshest that can be given in relation to taxes.