Filing Taxes is one of the most important tasks that you have to carry out periodically as an adult. The most important thing to keep in mind while filing taxes is to make sure that the calculation of taxes is accurate according to the place that you reside at since the tax laws change from one place to another. Incorrect or missed filing of taxes can haunt the taxpayers in form of back taxes, which is the tax amount that is due to be paid to the government for the previous years. The back taxes accumulate over the years and you may be especially prone to back taxes if you are doing self-filing of your taxes over the years. The reason for this is that the tax laws and regulations are consistently changing and you may have to follow a different set of tax regulations from the previous year and more so if you have moved to a different place which may have different laws. For any person, it is a difficult task to stay abreast on all the updates while filing taxes.

What is the risk?

The back taxes can come back to haunt sometimes even years after the tax filing has been done. Once the Internal Revenue Service or IRS audits your accounts and finds pending back taxes, they will add to that penalties and interest that you need to pay back. The resulting tax debt is therefore much larger than the initial back tax amount. To create pressure on you, several detrimental actions such as tax levy, tax liens and wage garnishment may be placed on you. These steps may endanger your financial well-being including the risk of losing your property, savings, retirement funds, business and other assets such as boats and cars. 

With wage garnishment, the IRS gets the right to directly approach your employer and confiscate directly from them up to 70% of your wages which can make it diffcult for you to manage your finances or care for your family. On the other hand tax levy such as bank levy, you will be informed of this decision through the mail. Once the levy has been put into effect, the funds in your bank account are frozen as they are. No transactions of withdrawal or transfer can be carried out from this account. You get 21 days to contact IRS and arrange for the re-payment of your tax debt failing to do which the money is transferred to the IRS permanently to settle against your tax debt.

What to do if any of such actions have already been initiated by IRS?

Your first action after receiving any such communication by IRS should be to contact a Tax Attorney and explain the situation along with all the communications that you have received. Your previous tax filings must also be shared with them. The tax attorney specializes in dealing with IRS, negotiating and settling the tax debt of their clients through a settlement agreement that would settle all your previous tax debt. Additionally, the tax attorney can help you file taxes proactively so that you can avoid any back taxes and even save money through all the applicable deductions that you may qualify for.