Back taxes are the taxes due or owed to the IRS or the State from earlier years by the taxpayer. In other words, Back taxes are basically, taxes a taxpayer failed to pay or the IRS, and the tax agency failed to collect on the deadline. Generally, the deadline for most people to file their income tax return and pay any tax owed to the government is 15th of April of every year. The tax return provides the calculation of both income and expenses, exemptions and how much tax is due. This is checked for mathematical accuracy and based thereon, if there is money (tax) due, a bill will be sent to you by the IRS for payment.
Since we are talking about back taxes, it is worthy to emphasize that they carry with it interest and is charged upon the taxpayer from the due date of the return / payment until the date of actual payment. The interest rate is determined on a quarterly basis at federal short-term rate plus 3 percent thereof. In addition to the interest, you'll generally have to pay a late payment fine or penalty of one-half (1/2) of one percent of the tax owed for each month, or part of a month, that the tax remains unpaid from the due date, until the tax is paid in full but up to the maximum of 25%. It is surprising to note that the penalty one-half (1/2) of one percent will be increased to one if the tax remains unpaid after 10 days from the time the IRS issued a notice of intent to levy. However, on the brighter side and as a consolation, individuals who file their return and pay on or before the due date, the one-half (1/2) of one percent will be reduced to one-quarter of one percent for any month in which an instalments agreement will have to be in place.
The penalty will further increase if you owe tax and don't file on time. There is a late filing penalty usually at five percent of the tax owed for each month, or part of a month that your return is late, up to five months. If your return is more than 60 days late, the minimum penalty for late filing is the smaller of $100 ($135 for returns required to be filed after December 31, 2008) or 100 percent of the tax owed.
In summary, the back taxes does not only pertain to the basic tax due the government but includes the fine for late payment and interest on the tax due as well as charges for the delay in the filing or for non-filing of the return. This will tell us that both the tax return and the tax payment are inseparable component of paying the annual taxes owed to the government. Furthermore, it is clear that when we speak of back taxes, we are not just talking about the basic tax amount due, but as we have explained earlier, it covers the fines, charges and interests on both the late payment of the tax as well as the late filing or non-filing of the return calculating the tax due, if any. As much as possible, it is advisable to avoid having back taxes by hiring a tax relief expert to advise you on this matter.
Back taxes help in all 50 states including Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Guam, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Puerto Rico, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming.