Back taxes can be understood as taxes that the individual or company does not pay for the year they were due; they can be partially unpaid or entirely. Such taxes can be owed at the local or state level or even the federal level.
In Miami, there are specific tax laws that might not be applicable everywhere, which is why it becomes essential that people remain aware of the rules and regulations that are applicable where they live.
Back taxes need to be paid as they collect interest, and penalties can be applied as well. It needs to be paid within the stipulated period, or the person will become subject to penalties. There can also be serious legal actions that can be taken against the person, which is why it is essential that they are paid back.
As a consequence, the person can be put in jail, wage garnishment can take place, etc. A Miami virtual accountant can help prevent this from happening by keeping track of your taxes and assisting with financial planning as well. They will make sure that such a situation does not present itself.
Comprehensively understanding back taxes
The individual usually owes the previous year’s tax. There can either be intentional reasons for not paying taxes or unintentional reasons. The reasons can be not paying the tax liability, not filing tax returns, or not reporting the income that is earned during that year.
If the person has not filed for a tax return, there can be a penalty of about 0.5 percent of the total amount that is yet to be paid by the individual. The penalty is going to be there until the person pays the entire amount owed by them or it reaches twenty-five percent of the total amount that is owed.
Furthermore, there are additional interests that are going to be charged as well by the International Revenue System(IRS). Since the debt is only going to increase as people move forward and the tax remains unpaid, the interest and penalty charges can grow significantly for the person.
It can be a severe issue if the person does not pay the entire amount, especially for those who have no means to pay it. Depending on the situation of the person, the government might intervene and make use of some strategy to be able to do something about the back taxes.
They can charge the individual, and they may demand that the taxes be paid right away. Sometimes, there are also voluntary disclosure programs that can help people avoid the criminal charges pressed against them.
What can be the consequences of not paying back taxes?
There are cases where the IRS has to intervene and start seizing properties. There can be a federal tax lien that can be imposed on the person, or the person may place a tax lien on the property. Furthermore, the IR can also make use of federal tax lien and tell the tax authorities to start seizing the person’s properties and assets.
The tax authorities get the legal right to begin seizing assets. The IRS also has the authority to garnish wages on that person and can even get the amount from their financial accounts until the entire amount of tax is paid.
Even if, after all this, the tax still remains unpaid, authorities may make use of a tax levy. In such a case, they get the right to start seizing that person’s property, bank accounts, or even automobiles. This will be done to get the entire amount that the person owes.
Get assistance from an accountant today!
It is, therefore, essential that you seek assistance from a professional from the beginning to avoid such things from happening in the first place. Professionals have all the knowledge needed to keep you updated on your financial situation or determine if there is anything that you should look into and resolve. They also ensure that taxes are paid on time and with accuracy.
