Why it is Important to Pay Back Taxes

Back taxes refer to the taxes a person owes for a previous year or a previous tax period. This situation occurs when a person owes taxes but fails to pay them on or before the due date. Back taxes can also occur when a person underpays his or her taxes. This can happen if the person intentionally or unintentionally fails to file taxable income. It is also important to note that the term back tax is usually in reference to the taxes owed to the Internal Revenue Services, though taxes can be owed to state or local tax agency.

The tax agency has the right to ask for immediate payment of the back taxes and may even impose stiff fines, interest on the amount owed and penalties. Failing to pay back taxes could result in criminal prosecution. Hence, it is important to file back taxes as soon as possible. The filing should also be accurate. This help to reduce the fines and penalties imposed by the tax agency.

Most people fail to pay their taxes because of lack of funds. This is one of the main reasons for understating taxable income or not filing tax returns. While some people skip paying taxes for a year or two, others may skip for several years together. This is not all prudent. In fact, it is risky. Even if you do not have the funds to clear your taxes, you should file your returns.

If you stop paying your taxes, sooner or later the IRS will come knocking at your doorsteps. Ignoring the IRS will get you into a bigger mess. Rather than paying steep fines and penalties or risk criminal prosecution, you should immediately consult a qualified and reputable tax professional, who will be able to evaluate your situation and come up with a strategy to deal with the IRS. The tax professional will also negotiate with the Internal Revenue Service on your behalf and try to reduce the penalties and fines levied. 

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