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Back taxes can be a big problem. Not only can failing to file or pay taxes lead to penalties and fees but, unaddressed, they can also result in wage garnishments and tax liens—even seizure of assets.
Fortunately, taxpayers who fall behind can seek help with back taxes from a Los Angeles tax lawyer—like the professionals at Tax Shark. Their qualified team can make sure all the necessary forms are filed correctly, minimize fees, and ensure all applicable exceptions are claimed. For IRS debt help, there’s no better place to turn.
There are different penalties for different oversights, such as failing to file taxes on time or failing to pay taxes owed. In both cases, interest can quickly snowball on the bill, making paying back taxes quickly critical. Worse, the fee system is a bit confusing as different rules apply to just paying late vs. filing late and paying late.
Each month the balance of a tax debt remains unpaid a 0.5 percent fee is applied to the account to a maximum of 25 percent of the original balance with partial months charged as full months.
This fee can be abated if the taxpayer can show reasonable cause for the failure to pay. It can also be reduced if an installment plan is set up. With installment plans, the fee drops to 0.25 percent each month.
On the other hand, if the debt is ignored, the IRS may issue an intent to levy property notice, meaning assets may be seized to satisfy the debt. If it remains unpaid ten days after this notice, the monthly fee increases to 1 percent.
Failing to file on time incurs a fee of 5 percent of the total tax owed each month up to a maximum of 25 percent. Partial months are charged in full. Regardless of the tax debt owed, if the taxes are filed more than 60 days late, a minimum charge of $215 or 100 percent of the unpaid tax, whichever is less, is added to the bill.
If the taxes are filed late and the payment is late, a combined fee is assessed for a total monthly charge of 5 percent with a maximum of 47.5 percent of the original debt.
On top of these fees, unpaid debt also accrues interest. This rate changes quarterly and is decided by taking the federal short-term note rate and adding 3 percent. For example, in the current quarter, the interest rate applied is 5 percent. It has remained between 3 and 6 percent in the last ten years.
Considering these penalties, it’s not hard to see why resolving back taxes is so important. Based on these numbers, here are a few things to remember:
So, what’s the best action to take when facing back taxes? With thousands of pages of tax laws out there, a qualified tax attorney is the way to go.
Tax Shark’s Los Angeles tax attorneys excel at navigating the tricky waters of tax repayment and settlement. They can work to reduce fees, negotiate fair installment plans or offers in compromise, and handle all the intimidating IRS interactions many taxpayers dread. This benefit may include IRS audits, claiming reasonable cause for failure to pay, requesting extensions, filing for a temporary delay of action, and more.
If wage garnishment, property liens, or bank levies are already in place, Tax Shark can also work to resolve those penalties to reduce the burden of debt a taxpayer faces significantly. Back taxes are not a matter that should be taken lightly and can be devastating even to financially stable individuals, but they don’t have to be. Recruiting the help of a professional is the best way to ensure the process is as painless and quick as possible.
Get help from a trusted Los Angeles tax attorney from Tax Shark by dialing or clicking the button below.