Owing IRS delinquent taxes is a serious problem that many taxpayers avoid confronting at all costs. Ignoring your IRS delinquent taxes will lead to incredible difficulties, however. Unless you handle your tax troubles correctly, they will only get worse. This page explains what happens when you do not take care of overdue IRS debts and tax returns, and presents a few solutions that may work for you.
Unfiled IRS Delinquent TaxesMore than anything, the IRS takes serious aggressive action for unfiled IRS delinquent taxes. If you have a high income for your unfiled IRS delinquent taxes or go several years without filing, you will be viewed as a tax protestor. So, the punishments for unfiled IRS delinquent taxes are steep. You can at least expect to not receive any refunds for years you do file, until you have filed all of your overdue tax returns.
The IRS will likely file a Substitute for Return for you. This causes many taxpayers to have remarkably high tax debts that otherwise would not exist. The reason for this is that all Substitutes for Return are filed in the following fashion:
- The filing status will either be Single or Married Filing Separately.
- No dependents, deductions, or credits will be used.
- You will be taxed at the highest rate, which is double the average rate.
The worst possible consequence of unfiled IRS delinquent taxes is that you may wind up being criminally prosecuted and serve jail time. It does not happen often. But, if the IRS feels that your offense is serious enough, they will resort to taking away your freedom.
Debt from IRS Delinquent TaxesIf you owe more than $10,000 to the IRS, you can expect to have a lien placed on your credit report for IRS delinquent taxes. 1 million liens were filed in 2010 alone. This can make it impossible to buy or lease, as well as gain employment. It also affects security clearances and government contracts.
Bank and wage levies are a very common collection activity used on those with IRS delinquent taxes. According to the National Taxpayer Advocate 2010 annual report, 3.6 million levies were used in 2010 to collect on overdue tax debt. IRS levies are known to financially cripple taxpayers, and often take them by surprise. With a bank levy, you can possibly lose money you have carefully been saving for decades. A wage levy can make it impossible to keep up with monthly bills, and has caused many taxpayers to lose their jobs.
Solutions for IRS Delinquent TaxesIf you have unfiled IRS delinquent taxes, you need to file them as quickly as possible. If the IRS has already filed Substitutes for Return, file your own returns for those years. It may lower your tax debt dramatically. The biggest reason why you need to file all of your IRS delinquent taxes is that the IRS will not make any kind of agreement with a taxpayer who has unfiled years.
If you owe a debt for IRS delinquent taxes, you need to find a way to pay it off. Many look to settling tax debt by filing for an Offer in Compromise, but this is often not the best option. Only 14,000 Offer in Compromise requests were accepted in 2010. 3 million installment agreement requests were accepted, however. If you owe more than $10,000 in IRS delinquent taxes, it is best for you to talk to a tax debt professional to find out which program would work best for you.
Do you need help with IRS delinquent taxes? Consult a professional. Call now or fill out the form below for a free tax debt consultation on IRS delinquent taxes! We'll only connect you with a tax debt relief company holding at least a B rating with the Better Business Bureau.