Back taxes are a constant complication until they’re completely resolved. Even if the IRS is not taking collection action, penalties and interest will continue to accrue each month. Resolving your tax debt early is always considered the best resolution.
The IRS will send out notices to inform you of any tax debt. The notices contain the amount due, why you owe, and appropriate resolution options. Resolving your debt as soon as you receive the first notice is the best policy. The longer you wait, the more you will need to pay.
Back taxes can either be resolved by paying the full amount in a lump sum or through an IRS payment plan. When choosing a payment plan, consider each requirement so that you do not default on it after qualifying. Each resolution plan has different agreement requirements that must be met to sustain a successful resolution.
It’s essential to understand IRS policies and rules regarding tax debt resolution to avoid making mistakes and complicating your case. Using professional tax assistance is recommended if you’re dealing with a high tax debt that you can’t pay at once.