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Tax Defense Network


Tax Defense Network

Delinquent Taxes

Dealing with Delinquent Taxes

Receiving a tax debt notice from the IRS can make it difficult to focus on what matters most. The best course of action is to verify the information, act quickly, and get help fast.

Open your IRS letters immediately to see the total you owe and how long you must contest or pay the amount due. Even the federal agency can make mistakes, so always doublecheck the claims against your records.

Delinquent Tax Returns
Delinquent tax returns are a result of a failure to file taxes or a missed tax return payment. This notice from the IRS is the first of many, so you still have time to fix things before they escalate. Here’s what can happen:

  • The IRS can file a return on your behalf called a Substitute for Return (SFR). This does not include any credits and deductions for which you may be eligible and enables the IRS to move forward with a debt assessment.
  • Delinquent payroll taxes can elicit more severe action, such as prosecution for tax evasion or incarceration.
  • If unaddressed over time, the IRS can issue liens, levies, wage garnishment and other penalties.

Addressing Your Tax Debt After Receiving a Notice

If you file your tax return within eight weeks from the date of the notice, congrats – you don’t need to do anything else. Here are alternative options:

To send your tax return: Use the response form with your notice and mail to the address listed.

If you disagree with the notice’s claims: If the contents of the notice or the reason for receiving it aren’t compatible with your records, you will need to contact the IRS via phone or in writing. If you don’t respond, the estimated tax may become final despite the accuracy of the IRS’s claims.

If you cannot pay: Whether you are unable to afford the full, partial or any amount of the owed tax debt, contact a tax professional to help you apply for a tax debt payment plan.

Note that the IRS does not include deductions or payment plans that you may be eligible for when calculating your tax liability. In case the notice’s estimate of your tax liability is higher than your actual tax bill, the IRS may take the balance of your refund.

When the IRS Holds Your Refund

If you have not filed past tax returns, the IRS can legally hold any refunds until the missing returns are filed to ensure you don’t have a tax debt. In this case, you’ll receive a Notice CP-88 in the mail to inform you of the situation. File any unfiled tax returns or contact the IRS to explain that you have already filed or are not required to. Any previous refund money will be applied to satisfy your tax debt.

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