How Can You Tell When You Owe Back Taxes?

Most Americans try to stay in the good graces of the Internal Revenue Service (IRS) by paying their taxes on time, but even the most diligent of payers can fall behind on their taxes once in a while. Knowing how to tell when you owe back taxes can help you stay on top of your IRS account and take advantage of programs available to assist in paying off tax debt.


How Can You Tell When You Owe Back Taxes?

Use the IRS Online Account System

The single best way to know if you have any tax debt is to access your account with the IRS. The agency operates an Online Account, which is a system that allows any U.S. taxpayer the ability to see exactly how much they owe the IRS based on their current tax filing documents. Every taxpayer already has an account with the IRS, but you have to claim it by providing proof of your identity when you sign up the first time.


Once you register your account and prove your identity, you'll be able to see if you have a tax debt with the IRS. The amount you owe, if any, will be current as of the calendar day you access the information, so it's the most up-to-date way to know what you owe. You'll also be able to see the following account details.

  • An accounting of your balance over the year
  • Your payment history
  • Your scheduled and pending payments
  • Data from your most recently filed tax return
  • Details of your payment plan, if you're on one
  • Any notices received from the IRS
  • Details of any Economic Impact Payments you've received


There are other actions you can take while you're in your account, including making a payment, viewing payment plan options, setting up a payment plan, and accessing your tax records through the Get Transcript function. The Online Account system is available Monday through Saturday, between 6:00 a.m. and 9:00 p.m. ET. On Sunday, the system is usually available from 10:00 a.m. to midnight, with occasional maintenance downtime affecting accessibility on some Sundays. Your balance will update once every 24 hours.


Check Your Mail

The IRS will always send you a notice in the mail if you have a tax debt. This is the only way that the IRS will communicate with you about tax issues unless you initiate contact with them by phone. This agency will never email you, text you, contact you through social media, or make the first contact with you by phone. If you have received any of those types of communication, you could be the target of a scam.


If you get a notice of taxes due from the IRS, we recommend that you respond right away by either calling the agency or logging onto your account online. You may also want to seek advice from us about how to respond and what options you have available to you to settle your tax debt. A letter from the IRS is an official document that is informing you of a problem with your account. Don't ignore it.


Call the IRS

As mentioned above, the IRS will never initiate contact with you over the telephone because too many scams have been perpetuated that way and the IRS doesn't conduct official business except in writing. However, you can get information about your account and whether or not you owe any taxes by calling your local IRS agency. Many people are more comfortable dealing with a governmental agency over the phone rather than online, so this is an option it offers.


However, with all the people in the United States who have to deal with the IRS, you'll find it difficult to reach a live person by phone. You may experience long wait times and even be disconnected if there are many people trying to call at once. For this reason, we suggest you attempt to view your tax balance online before contacting the IRS by phone. We also suggest you get help in dealing with the IRS from tax professionals.


Combination of Methods

Due to the high number of authentic-looking scams, we recommend that you use a combination of these methods to confirm that you have a tax debt with the IRS. If you get a notice in the mail that you owe taxes, it's best to contact the IRS by phone or through the Online Account portal to verify the validity of the notice. If you do confirm that you owe the IRS taxes, you can start exploring your resolution options.


Ways to Resolve Tax Debt

Once you verify that you have a tax debt, you'll want to make arrangements to pay that debt as quickly as possible, especially because penalties and late fees can quickly pile up. There are several ways to address your tax debt, and we suggest you seek advice from our tax specialists to determine which solution is best for you.


Installment Plan

The easiest tax debt program to qualify for is an installment plan because you're agreeing to pay your entire tax debt over time and not asking to have some of it forgiven. You can apply for an installment plan directly through your online account with the IRS, and may be approved immediately based on the amount of your payment proposal toward your outstanding debt. You must adhere to the agreement once it's approved and make your payments on time.


Offer-In-Compromise

An offer-in-compromise or OIC is a tax debt resolution option that allows taxpayers to make an offer to the IRS of how much of the total debt they will pay that will satisfy their tax obligation. Usually, OICs represent a fraction of the total debt owed, and for this reason, they are extremely difficult to get. You have to prove that you are unable to pay your total tax debt in full even if offered installments.


You'll also be required to document your assets and may have to sell some of them to pay down your debt before an OIC can be approved. In other words, you can't have thousands of dollars in assets and a large outstanding tax debt that you're trying to resolve with an OIC. The IRS will reject your offer because it thinks you can liquidate your assets to satisfy at least a portion of your debt.


If you're going to try to get an OIC, it's best to do it with the help of a tax professional. Only about 40% of offers are accepted by the IRS, and most of those are filed with the assistance of tax professionals who understand which information the IRS needs to prove that paying the full tax amount would represent a hardship for you. You must also be up-to-date with your tax filings to qualify for an OIC.


Currently Not Collectible Status

Taxpayers who are experiencing a significant financial hardship can apply for currently not collectible status, which is a temporary solution to a tax debt. If you qualify, you won't have to make any payments toward your tax debt until your financial situation improves. Your status as currently not collectible will be reviewed on a regular basis, so don't count on this option to fully resolve your tax issue.


Tax issues are extremely complicated, and it can be scary dealing with the IRS, a powerful government agency that can cause financial havoc in your life. Contact Tax Alliance, LLC right now to discover how we can help you determine if you owe taxes and how best to resolve your tax debt issue.


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If you are not happy with our tax services within the initial 21 days, we will give you a 100% refund of services rendered, no questions asked!

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