Five Things Everyone Should Know About Back Taxes

Did you miss the April 15^th deadline to file your taxes?  According to Tax Debt Resolution, over 20 million Americans are in the same boat as you.  As Wesley Snipes and Richard Hatch of “Survivor” fame can tell you, not filing your taxes can lead to prison time.  But before you press the panic button, check out these five things every American should know about back taxes.

1. Refunds are possible – Not only are they possible, but some statistics show that those who have back taxes are more likely to be owed a refund than the general population.
2. Time is ticking – If you are one of the many people who have back taxes and are owed a refund, you only have a certain amount of time to file and collect before the IRS can legally keep the money owed to you.  The statute of limitations to collect your refund is three years from the original due date of the tax return.  So if you have a 2009 return that you were due an amount on, time has run out, but don’t forget:
3. You still have to file a return – Even if you are owed an amount, tax documents from income received and other bookkeeping materials have been sent to the IRS with your name on them and must be reconciled.  The good news is that there is no fee from the IRS for filing late returns if you are owed a refund.
4. And if you do owe the IRS back taxes? – It is essential to file right away, as those who do owe an amount and file late are subject to penalties, which increase the later the tax documents are filed.
5. Beyond penalties – Beyond the penalties for filing late, there are many tools the IRS can use to collect back taxes.   These include a lien, which is intended to limit the credit of those who owe an amount, wage garnishment, which involves the IRS automatically collecting funds from income you receive, and the tax levy, which involves the IRS seizing property and possessions in order to collect the amount due.