Should I File Back Taxes If I Owe Money to the IRS?

On: March 11, 2024

One of the scariest things a taxpayer encounters is owing money to the IRS. It can cause a serious financial burden to the taxpayer and leave them with little money to live on should the IRS move forward with tough collection actions. 

Forgetting to file your tax return(s) means that you are going to likely owe the IRS money as they will hit you with interest and penalties because of it. If you have unfiled taxes, do know that you are not alone. 

Whether you have one or ten unfiled tax returns, it is important to get the situation under control. We know it can seem impossible, but with the assistance of a competent team of IRS tax experts, you can do it. At Leading Tax Group, we will help you get all of your tax returns filed and work out a plan with the IRS that makes financial sense for you.  

What Exactly Are Back Taxes?

Back taxes are taxes that are owed to the IRS but have not been paid. There are a couple of different ways that you can accrue back taxes. 

The first way is not filing your tax return at all and the second way is filing your tax return but failing to pay the amount of taxes due at that time. 

Do I Really Need to File Old Tax Returns? Won’t the IRS Just Move On?

Yes and no. It is important for you to get a handle on your taxes and file any and all old tax returns that you have not filed. It can feel very overwhelming but working with a tax professional can help alleviate some of that stress you experience. 

The longer you continue to wait to file your taxes, the worse it will become for you. The IRS knows that you didn’t file your returns and they definitely know when you owe them money. The IRS is not going to just move on because they want their money. 

Does Interest Start Accruing From the Day I File My Late Return?

No. In fact, it starts to accrue from when the tax return was due. This is why it is so important to address any tax returns that you have not filed. Interest and penalties will continue to add to the tax liability that you initially owed. This can create a very large tax liability very quickly. 

What Happens If I Just Ignore What I Owe to the IRS?

If you were to ignore the tax liability you owe to the IRS, you can expect them to be persistent. The IRS will start out by sending you repeated notices to get your attention and ask you to call them. If these attempts go unanswered, the IRS will move to implement stricter collection actions such as wage garnishment, bank levy, and asset seizure. 

What Do I Do Now That I Owe the IRS? Call Leading Tax Group! 

Owing the IRS money is not something that will just disappear or go away because you turn a blind eye to it. The IRS will come after you for what they are owed. 

Filing past due tax returns means that the IRS will assess penalties and interest against you, so it is important to expect that to happen. When you hire our tax team, we will work closely with you and the IRS to limit these penalties and fees. You should never file past-due tax returns on your own and always consult with a tax professional first. 

You do have options and do not need to worry about the tax liability that may be assessed. We will explore each one of your options with you and help you choose the one that fits your financial situation best. 

If you have unpaid taxes or late returns that need to be filed, call Leading Tax Group today for a free consultation.