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Unpaid Taxes: Useful Resources to Resolve IRS & State Liabilities

Do you have unpaid taxes with the IRS or State? Worried you won’t be able to pay your next tax bill? Luckily, there are lots of options to help you pay off your tax debt. To understand how the IRS works, check out the following links. Remember, many states have similar resolution frameworks.

Options If You Can’t Pay Your Taxes

The IRS realizes there are situations where it’s hard to pay your taxes. To help, the agency has created a range of different options. Beyond the IRS-sanctioned options, there are a variety of other alternatives. Ultimately, it’s important to explore all the options and figure out what’s best for your situation.

Penalties, Interest, and Other Consequences of Unpaid Taxes

If you file your tax return late or don’t pay your taxes, the IRS assesses penalties and interest. In addition, if you fail to make payment arrangements, you may face serious collection activity including asset seizure or wage garnishment.

The Failure to Pay Tax Penalty

If you don’t pay your taxes or if you underpay, the IRS charges the failure-to-pay penalty. The penalty ranges between 0.25% and 1% of your balance every month. This link above explains the charges and looks at how to remove failure-to-pay penalties.

How to Find Out How Much You Owe the IRS

If you aren’t sure how much you owe the IRS, you can check online, over the phone, or through the mail. The most reliable option is to use the phone or the IRS’s online tool. When you receive IRS notices in the mail, your balance may not reflect all interest and penalties.

General Overview of Tax Options by Debt Amount

If you owe back taxes, your options vary depending on how much you owe. There are different resolution options and different implications to owing at different debt levels. Generally, the IRS view tax debt in the following categories: less than $10,000, $10,000 to $50,000, and over $50,000. Here are details on what to expect in each situation.

IRS Statute of Limitations for Collection

This refers to how long the IRS has to legally collect taxes owed. After the statute of limitations (SOL) expires, the IRS cannot take you to court over old tax debt. Usually, tax debt expires after 10 years, but this rule is not set in stone. There are some actions that toll or extend the SOL. Use the link above to understand more.

FAQs About Unpaid Federal Income Taxes

Frequently asked questions and answers about unpaid taxes. Review the penalties and what actions the IRS can take, and get tips on how to resolve your tax issues.