What Should You Do If You Owe Back-Taxes to The IRS?

Do You Owe The IRS Back-Taxes in Minneapolis?

If you owe back-taxes to the Internal Revenue Service (IRS) and can’t pay your taxes on time, you will be liable for penalties and interest rates on what you owe. Nonetheless, do not panic. Simply still file your taxes and seek extra time to pay what you owe.

To help you understand, we will illustrate what happens when you do not file or pay taxes on time as well as what is to be done when you have taxes that you owe to the IRS. Always remember that it’s crucial that you always file your tax return on time even when you can’t pay your tax bill. To prevent interest rates and penalty, you can seek for time extensions.

So What’s The Tax Penalty?

The tax penalty is equivalent to 5% of the unpaid tax balance (part of a month or per month basis). This can sum up to 25% of unpaid taxes. It is wise to take note that if failure to file taxes is due to fraud, the 5% per month penalty on your  tax balance can increase to 15% per month. In situations where tax returns are filed beyond 60 days after the tax due date or extended due date, the minimum tax penalty is equal to the lesser of $210 or 100% of the unpaid tax (for 2019 tax returns that are essential to be filed).

In short, you can be negatively affected with great penalties and interests when you owe back-taxes to the Internal Revenue Service (IRS) or current taxes. It is vital to be aware that when you fail to pay your taxes, the penalty begins at 0.5% of your tax owed balance due per month (this is capped at 25% of the back taxes you owe). If you underpay your taxes, the interest rate is presently marked at 6% (as of May 2019) and is subject to alter every quarter of the year.

To better mitigate your tax situation when such a case arises, a professional tax consultant can deliver the best solution and advice for you.

Why You Should Work With MWB Tax Solutions

MWB Tax Solutions is a tax consultant firm specializing in assisting clients to solve overwhelming IRS debt. Our dedicated licensed experts are here to support you to reduce your IRS debt, file delinquent and un-filed tax returns, and set up affordable payment plans. Contact us today for a free and confidential consultation at 612.524.5811.

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