What Is Tax Debt And How Does It Increase With Time?

What Is Tax Debt And How Does It Increase With Time?

If you’re concerned about the possibility of incurring tax debt, you probably want to know what constitutes tax debt and how people accumulate tax debt. Even more concerning, you probably want to know how the IRS collects tax debt and unpaid taxes. When the IRS is sending you letters about taxes that are past their due date, you technically have tax debt, so it’s important to know what next steps the IRS might take to get the money they believe they are owed. 

So you can better prepare yourself for what methods the IRS may use to collect on a tax debt, let’s go over the details about what “tax debt” means, what the common causes of tax debt are, and what the IRS can legally do to collect on tax debts. The first step to getting tax debt relief is understanding the possible tax debt relief programs and tax relief services available to you so you can resolve your IRS debt before it spirals out of control.

What Exactly Is Tax Debt?

To start, what does tax debt mean? At what point are you considered a tax debtor to the IRS? The technical definition of tax debt is any tax owed to the IRS after the filing deadline for the owed taxes has passed. Even if you filed your tax return before the filing deadline and partially paid the taxes due, the IRS will consider the remaining tax balance a tax debt. So the main determiner of whether or not you’re technically “in debt with the IRS” is the due date on owed taxes. If you are past the due date with any amount of owed tax, then you have tax debt and may want to consider tax relief services if the amount owed to the IRS is beyond your financial means to pay.

What Are the Most Common Causes of IRS Tax Debt Issues?

The reality is, there are millions of taxpayers at any given moment that owe IRS tax debt, many of whom don’t even realize it. If any amount of money owed to the IRS isn’t paid by the due date for the tax liability, it’s considered a tax debt. There are a handful of ways that taxpayers might wind up owing tax debt. If you’re unsure whether or not you actually have IRS tax debt, be sure to check the status of any of the following applicable tax situations to get a better read on where you stand with the IRS. If you realize you have tax debt, IRS debt relief services are available to you, so be sure to read on about the available IRS tax relief programs to alleviate your tax debt.

Unfiled Tax Returns

One of the main ways people wind up in debt with the IRS is unfiled tax returns. When tax returns aren’t filed on time, the IRS can eventually file a substitute return that simply estimates your owed tax, often resulting in a higher tax liability than if you had filed the returns with all deductions accounted for. If you have unfiled tax returns, it’s critical that you get them filed as soon as possible to avoid tax debt. Part of our tax relief services includes helping you get your unfiled tax returns filled out properly and correctly submitted to the IRS.

Failure to Pay Estimated Taxes

Having estimated taxes due each quarter increases the likelihood of falling behind on taxes, especially for businesses with seasonal income that may decline when tax payments are due and money is tight. Perhaps you’ve let some of your estimated taxes fall behind this year, and now you’ve found yourself in tax debt. The good news is, there are tax relief programs available to you and Alleviate Tax is here to help.

Adjustments to Your Tax Return

When the IRS adjusts a past-year tax return, you might not know until after receiving a letter from the IRS in the mail. By the time you receive a letter from the IRS about a tax adjustment, you will already be considered a tax debtor.

Unplanned Financial Issues

Another common reason for taxpayers accumulating tax debt is unplanned financial issues. Sometimes, there are things that are simply out of a person’s control that can lead to a loss of income or savings, making it impossible for them to pay their tax liabilities in full by the due date. This leads to tax debt that can build and build to an amount that feels insurmountable.

Fortunately, Alleviate Tax provides tax relief services that can help you get set up with one of the many IRS tax relief programs so you can get your financial life back on track. Instead of declaring bankruptcy or ignoring the problem, reach out to one of the tax specialists at Alleviate Tax today.

How Does The IRS Collect Unpaid Taxes?

The most crucial concern when it comes to unpaid taxes or tax debt is the fact that the IRS has numerous ways it can attempt to collect on your tax debt. Each method comes with its own set of negative consequences, from preventing you from buying a house to having your bank account cleaned out overnight.

A few of the actions the IRS may take to collect tax debt from taxpayers include:

  • Filing a notice of Federal Tax Lien
  • A bank levy that can entirely empty an account
  • Reductions in future tax refunds to pay the tax debt

If you have tax debt that the IRS is attempting to collect using the above methods, relief from your tax debt is available. Alleviate Tax specializes in providing tax relief services for people who’ve fallen behind, helping them get back on track. We alleviate taxpayers with IRS debt relief that works for their unique circumstances.

The fact is, there is an array of IRS tax relief programs available to you as a taxpayer. While you may not qualify for every program, there’s bound to be a way you can alleviate your tax debt burden. Call one of our tax relief specialists today to learn what tax debt help is available to you so you can regain control of your financial future.

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