Why Early Resolution of Back Taxes is Beneficial

Posted on February 14, 2022

Why Early Resolution of Back Taxes is Beneficial

Back taxes, if remain unpaid for years, can increase to epic proportions, and become difficult to pay, even for celebrities. Comedian Katt Williams’ 2007 tax debt totalled up to $284,000 after he stopped paying. As in most cases where taxpayers do not pay their entire tax debt, the IRS placed a lien on Williams. The comedian resolved the tax issue, and the IRS removed the lien, but soon placed a lien worth nearly $4 million after another back tax debt was discovered.

Back Taxes Resolution through IRS Payment Plans

The IRS has legal rights to collect back taxes through the seizure of property and assets if necessary. The IRS publicizes the celebrities who find themselves in trouble with back taxes to improve tax compliance among taxpayers.

Tax debt resolution includes monthly payments, reduction in the tax amount, and/or postponing payments. Customized payment plans, such as an Installment Agreement, or a Partial Payment Installment Agreement can be used by taxpayers to pay their tax debt when they cannot pay the entire amount of debt in a single payment.

Back Taxes Resolution, Penalty and Interest

Apart from the amount of taxes owed, the IRS also charges penalties for non-compliance, which are added to the total amount. Along with penalties, interest is also charged on a tax debt, even if a taxpayer begins to pay back the debt. It is only after the full payment of the tax debt that a taxpayer is free from interest and penalties.

Back Taxes Resolution using Help

Because of the complexity of the U.S. tax code, most taxpayers hire professional tax resolution services. Tax professionals and tax resolution companies can assist taxpayers in paying their tax debt in the most comfortable way possible, using extensions for tax debt, payment and/or reduction of the tax debt amount, and affordable payment plans.

It is wise to begin looking for a resolution to back taxes to avoid interest and penalties. Sooner or later, the IRS will begin to collect the taxes owed with collection actions, so it is get the most advantageous resolution of back taxes possible.