There is more than one way to deal with back taxes. The best course of action for one person may not work for another, as a lot depends on one’s financial situation, what assets he or she has and how much money is owed to the IRS. What can be said across the board is that a person should never ignore a tax debt. The IRS statute of limitations expires after ten yeas, but the IRS will usually take serious action against a person before this time is up. Furthermore, failure to pay back taxes will show up on a person’s credit report and do serious damage to one’s credit ratings.
Those who owe back taxes should seriously consider professional help tax debt relief. A CPA can give one good advice as to what should be done to pay off the back taxes. In many instances, the CPA will ask a person to provide the last few tax forms. Many people make mistakes on their returns and overlook deductions that they could claim. If these deductions add up to a considerable sum of money, then the CPA will file an amended return. This is something that must be done very carefully, as if one does not have enough supporting documentation for the amended return, the IRS can start an audit.
In many instances, a person’s best option is to work out a payment plan with the IRS. With a payment plan, a person would have a set amount of money withdrawn from his or her account every month. The downside of a payment plan is that the IRS will charge an interest rate and/or penalty fee, so one will actually end up paying back more than just the actual sum of money owed. Those who can pay off the lump sum of money owed should do so right away, even if it means selling off one or more assets. This can be painful but it will in the end save a person a lot of money that would have been spent on the interest and/or penalty fees levied by the IRS.
It is possible to discharge some back taxes under bankruptcy, but this is not easy and in many cases declaring bankruptcy will not discharge money owed to the IRS. Alternatively, one may be able to work out a compromise agreement with the IRS and have most of the back taxes written off. The IRS will consider such an agreement is one is facing severe financial hardships and it is clear that the IRS will never be able to get the full sum of money it is owed.
While dealing with back taxes can be hard, tax relief USA is not hard to find. There are a number of CPAs and tax attorneys in any given state that can work with a person to create a tax repayment plan that is suitable for both the individual and the IRS. A wise individual will get help as soon as possible, as the IRS can and usually does take drastic action against people who owe back taxes and do nothing to repay them.