Owing back taxes can be stressful and overwhelming, especially when penalties and interest continue to grow. If you have past due tax liabilities, unfiled tax returns, or outstanding penalties, taking proactive steps toward tax resolution is essential to avoid further financial and legal consequences.

The good news is that the IRS offers several programs to help taxpayers resolve their tax debt. Whether you’re an individual or a business, understanding your options can help you regain financial stability and avoid more severe enforcement actions like wage garnishments, bank levies, or tax liens.

Tax resolution refers to the process of settling unpaid tax debt with the IRS or state tax authorities. It involves finding a solution that allows taxpayers to pay their tax debt in a manageable way, whether through full payment, a negotiated settlement, or other relief programs.

There are several reasons why taxpayers may fall behind on their taxes, including financial hardships, missed deadlines, or errors in previous filings. No matter the reason, it is important to address the issue as soon as possible.

1. Past Due Tax Liabilities

If you owe unpaid taxes, the IRS will send notices demanding payment. Ignoring these notices can lead to collection actions, including wage garnishments, tax liens, and levies. Resolving past due tax debt involves reviewing your financial situation and determining the best strategy to settle the balance.

2. Unfiled Tax Returns

Failing to file tax returns can lead to serious consequences. The IRS may file a Substitute for Return (SFR) on your behalf, often resulting in a much higher tax bill than if you had filed yourself. Filing past-due returns as soon as possible can help reduce penalties and prevent further collection actions.

3. Tax Penalties and Interest

The IRS imposes penalties for late filing, late payments, and underpayment of taxes. Additionally, interest accrues on unpaid balances, increasing the total amount owed. Some taxpayers may qualify for penalty abatement to reduce or eliminate certain penalties.

1. Installment Agreement (Payment Plan)

If you cannot pay your full tax debt immediately, the IRS may allow you to set up a monthly payment plan. There are different types of installment agreements, including:

• Short-term installment agreements (for balances paid within 180 days)
• Long-term installment agreements (for larger balances requiring extended payment periods)
• Partial payment installment agreements (for those unable to pay the full amount but can make smaller payments)

2. Offer in Compromise (OIC)

An Offer in Compromise allows eligible taxpayers to settle their tax debt for less than the full amount owed. The IRS considers factors such as:

• Ability to pay
• Income and expenses
• Asset equity

This option is not available to everyone, and the IRS will only accept an OIC if they believe they would not be able to collect the full amount through other means.

3. Penalty Abatement

The IRS offers penalty relief for certain taxpayers who can demonstrate reasonable cause for failing to pay or file on time. Examples of reasonable cause include:

• Serious illness or natural disaster
• Death of a close family member
• Incorrect tax advice from a professional

First-time penalty abatement may also be available for taxpayers with a history of timely filings and payments.

4. Currently Not Collectible (CNC) Status

If you are experiencing severe financial hardship, the IRS may place your account in Currently Not Collectible (CNC) status, temporarily pausing collection efforts. However, interest will continue to accrue, and the IRS may review your financial situation periodically to determine if you can resume payments.

5. Innocent Spouse Relief

If you filed a joint return with your spouse and were unaware of errors or unpaid taxes, you may qualify for Innocent Spouse Relief. This program can remove tax liability if you can prove that the tax issue was due to your spouse’s actions without your knowledge.

Failing to address past due tax liabilities can result in serious consequences, including:

• Tax liens – The IRS can place a legal claim against your property.
• Wage garnishments – The IRS can take a portion of your paycheck.
• Bank levies – The IRS can seize funds from your bank account.
• Increased penalties and interest – Your debt continues to grow over time.

The sooner you take action, the better your chances of negotiating a favorable resolution.

If you owe back taxes or have unfiled returns, seeking professional tax assistance can help you navigate IRS procedures and negotiate the best possible outcome. A tax professional can:

• Analyze your tax situation and determine the best resolution strategy
• Negotiate with the IRS on your behalf
• Help you apply for penalty abatement, installment agreements, or other relief programs

Tax issues do not resolve themselves. Taking immediate action can prevent more serious financial and legal consequences.

If you need help resolving your tax debt, contact us today to discuss your options.