What are my options if I owe back taxes on my personal income?
If you owe back taxes, you should resolve the issue as soon as possible. The IRS charges penalties and interest on back taxes. These could add up quickly over time.
If you owe back taxes, you can make an offer in compromise to the IRS offering to pay less than the full amount of back taxes you owe. The IRS can accept less than the full back taxes owed by you if there is doubt as to your liability – whether you actually owe the taxes or collectability – you do not have resources to pay the amount owed. If the IRS rejects the offer, an attorney can appeal that decision to the IRS Office of Appeals, or even the U.S. Tax Court.
If you are unable to pay you back taxes in full in a single payment, you can enter into an installment agreement with the IRS to pay your tax liability through monthly installments. The installment agreement may pay all or part of your past tax liability.
When you are given a penalty abatement by the IRS, it means that you can pay only the back taxes owned without the penalty and interest (if any).
An IRS tax levy is a legal seizure of your assets to satisfy an IRS tax debt.
Trust Fund Taxes
A trust fund tax is a tax that is taken out of sales or employee pay or set aside by an employer and which must be paid to the government. Income tax, social security and Medicare taxes are common examples of trust fund tax.
Not paying trust fund taxes can result in criminal prosecution besides interest and penalties. Contact the IRS immediately and offer an offer in compromise if you haven’t paid trust fund taxes. You can also enter into a payment agreement with the IRS. If the IRS rejects the offer, an attorney can appeal that decision to the IRS Office of Appeals, or even the U.S. Tax Court.
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