Problems and Solutions Involving Back Taxes and Filing
Back taxes can be defined as the taxes that were not paid when due and hence, they are owed from a prior year. A great predicament befalls those who fail to pay back taxes as required. However, revenue service gives the task of tax collection to a private collection agency that negotiates with the taxpayer who lacks the means to pay for a lesser settlement. It is achieved through an offer in compromise with the revenue service or the lawyer.
Back taxes are not the only problem that increases penalty but also unfiled tax returns. It costs so much to taxpayers who fail to file tax returns with the help of IRS Bank Levies Baytown TX than even paying taxes. The extent of seriousness on the matter of filing tax returns is in penalties such as not being refunded the money one is owed by the revenue service.
There are many consequences involving unfilled tax returns. One of which is the penalty to unfiled tax returns. This is the most consequential and costs a lot. It is usually a monthly penalty of 5% of total balances. It may be as much as 25% of the total balance. Interest penalty results from back taxes. it is up to 4% of the total balances, but the rate varies since it is updated on quarterly basis. Failure to pay tax penalty goes up to 0.5% of the total balance every month.
Anyone who lacks the means to pay back taxes still have the opportunity to file tax returns to avoid accumulation of penalties especially that which involves unfiled tax returns which is much greater. Besides huge penalties, one risks imprisonment due to the failure to file tax returns. It is extremely unlikely that the revenue service entitles and Settle Back Taxes Baytown TX one to prosecution if one is ready to file old tax returns.
It is never too late for a willing part to file old tax returns. Necessary documents will be required for filing process. The possible place to get this document is the previous place of work, and if not found, the revenue service might be having these documents. After getting the documents, get tax forms prepared. These forms are developed individually or with the help of the company. Specific data is required for the years missed. This marks the completion of filing where the files are now sent to the revenue service via the common address or any other address one is advised by the revenue service for special cases. After filing, it is necessary to pay the back taxes one is owed to be free from any kind of penalties. Consultation on matters not understood involving anything discussed above can be done, and it is facilitated by qualified auditors from the revenue service or even private auditors. Bank levies allow legal seizure of property to satisfy a tax debt.