Unpaid Taxes
Request a Consultation
Owing money to the IRS creates stress and uncertainty. The longer tax debt remains unresolved, the more it grows with penalties and interest. But the IRS knows that not everyone can pay in one lump sum—they offer several flexible ways to help you stay on track without wrecking your finances.
What Happens When You Owe the IRS
When you owe taxes, the IRS begins a predictable escalation process. Initial notices identify discrepancies and propose adjustments. Follow-up notices restate issues with increasing urgency. If ignored, you’ll receive a Notice of Deficiency, then an Assessment Notice confirming the tax is legally established, then collection notices demanding payment with increasingly severe language, potentially culminating in liens, levies, or other enforcement actions.
The Failure to Pay Penalty
The IRS charges a failure to pay penalty of 0.5% per month on unpaid taxes, up to a maximum of 25%. This rate increases to 1% per month after you receive a notice of intent to levy. Combined with interest charges, your tax debt can grow significantly over time.
The Collection Statute of Limitations
The IRS generally has 10 years from the date of assessment to collect taxes. After this collection statute expiration date (CSED), the debt is no longer legally enforceable. Understanding where you stand relative to this deadline is important when evaluating your resolution options—sometimes waiting strategically makes sense.
Options for Resolving Unpaid Taxes
Installment agreements allow you to pay your tax debt over time. The IRS offers several types depending on how much you owe and how quickly you can pay. For amounts under $10,000 that can be paid within three years, the IRS must grant a ‘guaranteed’ installment agreement. Streamlined procedures apply for liabilities under $50,000 payable within six years.
Offers in compromise allow qualifying taxpayers to settle their tax debt for less than the full amount owed. The IRS accepts an offer only for the highest amount it can realistically collect—the program follows strict rules and detailed financial calculations.
Currently not collectible status may be available if paying any amount toward your tax debt would prevent you from meeting basic living expenses. This designation temporarily suspends collection activities, though interest and penalties continue to accrue.
If you owe back taxes and want to explore your resolution options, contact Boss Tax Law today for a consultation.