Glossary

Back Taxes

Back taxes refer to any taxes that were not paid in full when they were due. These can include federal, state, or local taxes, and they may accrue penalties and interest over time if they remain unpaid. Back taxes can arise from underreporting income, filing a return late, or failing to file a tax return altogether.

The IRS and state tax agencies take aggressive measures to collect back taxes, which may include:

Penalties: Late payment penalties can be as high as 25% of the unpaid tax.
Interest: Interest on back taxes accrues daily from the original due date.
Liens and levies: The IRS may place a federal tax lien on your property or levy wages and bank accounts to collect back taxes.

To resolve back taxes, taxpayers can pay the full amount, set up an Installment Agreement, or apply for an Offer in Compromise if they qualify. It’s important to address back taxes as soon as possible to avoid further penalties and enforcement actions.

Recommendation

CP76A Notice

The CP76A notice serves as a reminder of potential underpayment of estimated taxes, prompting taxpayers to review their payments.

Tax Offset

A tax offset occurs when the IRS uses a taxpayer’s refund to pay off an outstanding debt, such as unpaid taxes, student loans, or child support.

CP21A Notice: Changes to Your Return; Balance Due

The IRS CP21A Notice informs taxpayers that their return was adjusted, resulting in additional tax owed.

CP259E Notice: Return Not Filed – Exempt Organization

IRS CP259E Notice notifies exempt organizations of a missing return, encouraging filing to avoid penalties or loss of status.

CP2000 Notice: Underreporter Inquiry

IRS CP2000 Notice notifies taxpayers of income discrepancies and proposes additional tax owed if no adjustments are made.

CP148 Notice

IRS CP148 is sent to taxpayers when there is a mismatch between the name or Social Security Number provided on the return and the IRS’s records.

CP503D Notice: Demand for Immediate Payment of Business Tax Debt

IRS CP503D Notice requires immediate payment of unpaid business taxes, warning of enforcement actions for non-payment.

Form 4868: Application for Automatic Extension of Time to File UIndividual Income Tax Return

IRS Form 4868 grants taxpayers an automatic six-month extension to file their federal income tax return.

Letter 2802C: Warning of Levy Action

IRS Letter 2802C notifies taxpayers that the IRS intends to levy their assets or wages unless they make immediate payment or establish a payment plan.

Statutory Notice of Deficiency

A Statutory Notice of Deficiency is an official IRS notification that a taxpayer owes additional taxes, with an opportunity to dispute the assessment in Tax Court.