The phrase “Back Taxes” itself is suggestive of its meaning. The taxes of a certain year that are not yet paid before the fixed time and are still outstanding are known as back taxes. To be clearer, if a person is unable to pay taxes for that year, he/she owes taxes in that year. If a person has back taxes, his liability amount will keep increasing due to the addition of interests and penalties. A penalty rate of 0.5% for every month is charged to the final amount if the taxes have not been paid past the due date. Learn more about Unfiled Tax Returns Michigan


The IRS can collect back taxes for up to 10 years only. After that, the statute of limitations will expire, and the IRS will no longer have the authority to collect back taxes from such person. The IRS can collect taxes from the date of taxing until 10 years. If the tax is from the year 2013 and it can be assessed by April 15, 2014, then the IRS can collect back taxes till April 15, 2023. The IRS is well-equipped and prepared to collect taxes from unpaid taxpayers. Such tools include sending a notice of deficiency and then a notice of intention to levy. If the worst happens, like the IRS issues a tax lien, then the IRS has the authority to stop your wage payment and divert the money to itself so that it can retrieve the amount unpaid, or the loss caused by you to the IRS. They also use the tool known as penalties which will be charged every month to remind you to pay your taxes as soon as possible.


The IRS might be cold-hearted while collecting taxes from taxpayers, but they do have a soft spot for people with genuine reasons for their inability to pay taxes. The IRS will be able to arrange for a payment plan for taxpayers with financial difficulties and might even provide tax relief after analysing their situation. The various reasons that might help get the IRS on your side are:

  1. Arson or fire
  2. Natural Calamities
  3. Death of any person in the taxpayer’s family
  4. Physical disability
  5. It was not possible to obtain the accounts and records.

The IRS has made instalment payments accessible to the taxpayers to minimise the tax liability falling upon the taxpayer. Instalment payments have helped many taxpayers across the nation by enabling them to repay their taxes in small and manageable amounts so that the financial burden would not be so stressful and overwhelming to the taxpayer and provide sufficient time for the taxpayer to get ready with the funds to repay his taxes. Another instrumental scheme provided by the IRS is the Offer In Compromise. It means that the taxpayers can negotiate with the IRS to agree to settle for a lesser amount than the original debt that is owed by the individual to the IRS.