Our Premium Selection of Top Back Tax Relief Specialists

For most of us, paying taxes is something that is unavoidable. But, sometimes, we might struggle with paying our tax bill completely and end up with back taxes. We are then in a situation where we need to pay taxes for the next year and catch up on the unpaid taxes as well. Needless to say, this is not exactly an easy situation to be in. Luckily, there are a few options for back tax relief that you can explore. Consumer Opinion Guide is here not only to help you find the best source of back tax help but to also offer the fundamental insight you will need to get into the entire process. We will cover what these taxes are, what are the consequences of not paying them, and provide you with several IRS back tax relief options.

What exactly are back taxes?

To put it simply, back taxes are those taxes that have been unpaid in the year that they were due, either fully or partially. These back taxes can accumulate penalties and interest for as long as they remain unpaid. Furthermore, a taxpayer can have unpaid back taxes across several levels, be it local, state, or federal.

To summarize:

• The taxes that are due to be paid but have not been are considered back taxes.
• They are subject to interest and penalties and should be paid back as soon as possible
• If these taxes remain unpaid, a taxpayer can expect serious legal action against them, such as prison time, tax liens, or wage garnishment.

A more detailed explanation

All back taxes refer to the amount owed in tax debt from prior years. A taxpayer can accrue back taxes due to unintentional or intentional reasons. Reasons for not paying taxes in time include failing to report all income earned throughout the tax year, filing a return and failing to pay the tax liability, or even neglecting to file a tax return in the first place. If a taxpayer chooses the latter, that failure will incur an additional penalty of 0.5% of the amount due.

Now, this penalty might not seem that dangerous at a first glance. But when you realize that it applies every single month until the tax is paid in full, it becomes much more worrisome. Luckily, there is a maximum that the penalty can reach, which is 25% of the tax owed. In addition to that, the IRS calculates interest on the unpaid amount, penalties included. The interest rates that IRS uses change on a quarterly basis. For example, in the third quarter of 2020, the IRS interest rate was 3%.

Penalties and interest continue to accumulate until back taxes are paid in full and can quickly grow to an unmanageable size. Unpaid back taxes can quickly become something that the taxpayer simply cannot pay. In these cases, the government decides on a strategy for that particular taxpayer. They can demand immediate payment, or they can offer enrollment in a back tax relief program. The government is fully aware that some people really need back tax help and may extend a helping hand in some cases. In other cases, individuals are forced to seek out the best back tax service for back taxes.

Recommended Consultants for Back Tax Help

While there are many IRS tax relief companies in the country, there are a few that stand out from the “pack”. According to the research of Consumer Opinion Guide, the companies that enjoy the highest rate of customer satisfaction due to their effectiveness are:

• Anthem Tax Services
• Community Tax
• Tax Defense Network

But you will do well to do your research on “tax relief companies near me”. Oftentimes, you can get sound advice from smaller back tax debt relief companies and enroll in back tax help programs that are specific to your area of residence. While these companies are your “go-to” when it comes to matters of tax relief, you will do well to exhaust any options you might have. Whether you are looking for IRS back tax relief help or need to file a claim, you always have a plethora of options in front of you. These back tax specialists will provide you with great assistance but that does not mean you can afford to discount other avenues of information along the way.

What are the consequences of unpaid back taxes?

The consequences of unpaid back taxes can be quite severe. The IRS has several means of forcing taxpayers to settle their outstanding tax debt. For example, the IRS can seize their assets, property, place property liens, federal tax liens, garnish their wages, and levy their financial accounts. In the latter case, the IRS can simply seize the money owed for back taxes from taxpayers’ financial accounts.

If, after that, the taxes still remain unpaid, the IRS can impose a tax levy on the taxpayer’s assets (cars, property, bank accounts, investment accounts, etc.) to collect the money owed in back taxes. The difference between a tax lien and a levy is that the former secures the government’s claims or interest in the taxpayer’s property in case of unpaid taxes, while the latter permits the government to actually seize and sell the aforementioned property to pay the tax debt.

Back in 2016, the IRS decided to turn over the collection of unpaid back taxes to a private agency that deals with collections. In most cases, you will need to talk to the collection agency to get any back tax help. But you can also still negotiate offers in compromise with the IRS. You can do so either on your own or through a back tax specialist.

The last resort – Tax lien

As a last resort, the government utilizes tax liens to force businesses and individuals to pay their back taxes. It is a legal claim by a government entity against any assets that a non-compliant taxpayer might have.

For example, the government can place a tax lien on taxpayer property if the owner failed to make the property tax payments or is owing for their income taxes. Federal and state governments usually place tax liens for back income taxes while local governments deal with both back income taxes and back property taxes. Simply placing a lien on an asset does not mean it will automatically get sold. What it does mean is that the tax authority gets “dibs” or first claim over other creditors that might be vying for the taxpayer’s property.

In addition to that, the tax lien prevents the business or an individual from selling or refinancing any assets it is attached to. This tax lien remains for the duration of the tax debt (until it is paid off) or if the statute of limitations on the debt expires. If, after the tax lien is in place, the back taxes still remain unpaid, the next step that the government takes is to impose a tax levy. This allows them to legally seize any assets that the taxpayer might have (automobiles, real estate, bank and investment accounts, etc.) and collect the owed money that way. The difference between a lien a levy is that the lien secures the government’s interests while a levy gives the right to the government to seize and sell the property to gather money for back taxes.

Back tax relief options

If you are late on your tax payments and simply cannot find a way to pay them back normally, you have several options in front of you:

• IRS payment plans
• Offers in compromise
• “Currently not collectible” status

The thing to note here is that you may not automatically qualify for any of these options, even if you use the best tax service for back taxes. To qualify for a back tax relief program, you need to fulfill certain requirements, which differ from one program to another. Your best option here is to either do your own research or hire a back tax specialist to help you out. In either case, let’s explore these options.

IRS payment plans

The first form of IRS back tax relief is an IRS payment plan. If you happen to simply need more time to pay the tax bill, this is the option for you. In most cases, the IRS will be happy to provide you with some additional time to pay your back taxes (plus any interest and fees that might have accrued) in installments over a set period of time. There are two versions of this plan – a short-term payment plan and a long-term payment plan.

The maximum you can owe to qualify for a short-term payment plan is $100,000 in combined tax, interest, and penalties. For a short-term plan, you can owe no more than $50,000 for the same. There are no fees associated with short-term IRS payment plans, and you can apply by mail, phone, or in person. The payments are made with either:

• check;
• money order;
• debit/credit card;
• or through withdrawals from your checking or savings account.

Fees

For long-term payment plans, there is a $31 fee if you apply online, a $107 fee if you do it via mail, by phone, or in person. Do note that these fees are only applicable if you pay through automatic withdrawals. If you want to use any other method, these fees are significantly higher – $149 for an online application, $225 for all others.

Duration

The duration of a short-term payment plan is 120 days but you can apply for an extension to up to 180 days by contacting the IRS by mail or phone. For long-term plans, and for taxpayers with low income, there is an option of waiving any setup fees for automatic withdrawals. Other application and setup fees can also be reduced to $43 or even reimbursed in select circumstances. What you need to do is figure out whether you fall under the “low-income” category before you submit an application. The duration of a long-term payment plan starts at 120 days but it can be significantly extended, depending on the circumstances.

A few things to note about back tax relief through an IRS payment plan

Even if you apply and set up a payment plan, you are still expected to pay interest and penalties for late payment. These continue to accrue until you zero out your tax balance.

If you happen to owe more than $25,000, the only option for setting up a payment plan is through automatic withdrawals from your bank account.

By paying with a debit/credit card, you will also incur a processing fee, which is around $2 to $4 per payment. Furthermore, the charge for credit cards is usually around 2% of the total payment.

A “low-income” applicant refers to individuals that have an adjusted gross income that is either at or below 250% of the federal poverty level. An easy way to see if you are considered to be in this group is through IRS Form 13844.

Offers in compromise

An offer in compromise is the preferable way of handling your back taxes if you qualify for it. The basic premise of this back tax relief program is that you get to pay back less than what you owe. However, this is only an option if you are really unable to pay your back taxes or are risking a serious financial hardship by doing so. The IRS is reluctant to extend these offers to everyone, of course, and not even the best tax service for back taxes can help in some cases. The determining factors for qualification are your income and expenses, and how many assets you have (and how much they are worth).

Applying for an offer in compromise

The first thing you will want to get is IRS Form 656-B. There, you will be able to read up on all the details of these offers. Here are some key takeaways:

• There is a $205, non-refundable, fee to apply. (If you are in the low-income category, there is the possibility of a waiver)
• Initial payment is compulsory, and it is also non-refundable.
• You are expected to be current on all your tax returns. Failure to file a recent tax return may prevent you from qualifying.
• The IRS reserves the right to keep or file any tax liens already in place until the offer is accepted and your end of the deal is fulfilled.
• You can’t qualify for an offer in compromise if you are in an open bankruptcy proceeding.
• It is possible to hire a qualified back tax specialist to help you with the paperwork but it is not required.
• Once your application is filed, the IRS will suspend any collection activities against you.

What happens if your offer is accepted?

If the IRS accepts your offer in compromise as a form of back tax help, your initial payment will depend on your monthly installments. If you offered to pay in five or fewer installments, the initial payment will be 20% of the total amount. In the case of six or more installments, the initial payment will be the same as your monthly installment.

• One thing to note about these offers is that some of the information contained within could be made public, such as your name, city, state, zip code, liability amount, as well as the terms of the offer.
• Even if you do qualify for this form of IRS back tax relief, any federal tax liens that the IRS has already filed against you will remain in place. They will remain that way until you fulfill your end of the bargain.
• Lastly, even if the IRS rejects your offer, you have the right to appeal within 30 days. In these cases, it might be a good option to look for the best tax service for back taxes in your area.

“Currently Not Collectible”

Another form of back tax relief is the “Currently Not Collectible” status. You can this status if you simply can’t pay for both the living expenses and taxes (within reason, of course). By being under this status, your account gets a delay in collection. To get your account to be currently not collectible, you will need to complete a collection information statement. This will prove that your finances are as bad as you present them to be. You are expected to provide information about your monthly income as well as your monthly expenses.

The “Currently Not Collectible” status is temporary and the IRS may review your income on a yearly basis to check whether your financial situation has improved. Furthermore, the tax debt never goes away, it is just delayed, and the IRS can still file a tax lien against you.

Save time and start handling your back tax issues today!

With its countless hours of researching hundreds of IRS back tax relief services across the nation, Consumer Opinion Guide has already done all the heavy lifting for you. All you have to do is go through our list and choose the back tax specialist best suited for your unique needs!