What Happens if You Owe the IRS Two Years in a Row?

Failing to file taxes or pay your tax bill on time can have serious consequences, including penalties, interest charges, and even legal action. If you find yourself owing the IRS for two consecutive years, it’s crucial to take immediate action to address the situation and minimize the potential impact on your finances and well-being.

Consequences of Owing the IRS for Two Years

  • Penalties and interest: The IRS will charge penalties and interest on the unpaid taxes, which can add up quickly and significantly increase your overall tax liability.

  • Wage garnishment: The IRS may garnish your wages, meaning they can take a portion of your paycheck to satisfy your tax debt.

  • Bank levy: The IRS can levy your bank account, seizing funds to cover your unpaid taxes.

  • Tax lien: The IRS can place a tax lien on your property, which gives the government a legal claim to your assets until the debt is paid.

  • Criminal charges: In severe cases, the IRS may pursue criminal charges for willful failure to file or pay taxes.

Options for Resolving IRS Debt

If you owe the IRS for two years, there are several options available to help you resolve your debt and avoid further penalties:

  • Installment agreement: You can enter into an installment agreement with the IRS to pay off your debt over time in monthly installments.

  • Offer in compromise: You can submit an offer in compromise to the IRS, proposing to settle your debt for less than the full amount owed.

  • Currently not collectible status: If you are experiencing financial hardship, you may qualify for currently not collectible status, which temporarily suspends collection efforts by the IRS.

  • Bankruptcy: In some cases, filing for bankruptcy may be an option to discharge your tax debt.

Seeking Professional Help

Navigating IRS debt can be complex and overwhelming. It’s highly recommended to seek professional help from a tax attorney or enrolled agent who can guide you through the process, represent you before the IRS, and negotiate on your behalf.

Steps to Take if You Owe the IRS for Two Years

If you owe the IRS for two years, it’s important to take the following steps:

  1. Gather your tax records: Collect all relevant tax documents, including tax returns, W-2s, and 1099s.

  2. Calculate your tax liability: Determine the total amount of taxes you owe, including penalties and interest.

  3. Contact the IRS: Reach out to the IRS by phone or mail to discuss your situation and explore your options for resolving your debt.

  4. Consider professional help: Consult with a tax attorney or enrolled agent to get personalized advice and representation.

Owing the IRS for two years can be a stressful and daunting situation, but it’s crucial to remember that there are options available to help you resolve your debt and get back on track financially. By taking proactive steps, seeking professional help, and understanding your rights and responsibilities, you can navigate this challenge effectively and minimize the impact on your life.

Filing Past Due Taxes. How Many Years WIll IRS Go On Unfiled Returns?


How many years can the IRS go back and make you pay?

The IRS generally has 10 years – from the date your tax was assessed – to collect the tax and any associated penalties and interest from you. This time period is called the Collection Statute Expiration Date (CSED).

What happens if you don’t pay taxes two years in a row?

What Happens If You Don’t File Your Taxes for Years? If you do not file your taxes for years, the IRS can take legal action against you. This can include filing a lien against your property or seizing your assets.

How long does the IRS give you to pay back taxes?

Also, your proposed payment amount must full pay the assessed tax liability within 72 months or satisfy the tax liability in full by the Collection Statute Expiration Date (CSED), whichever is less. Refer to Time IRS Can Collect Tax for more information about the CSED.

What if I owe the IRS a tax penalty?

The failure to pay penalty starts at 0.5% of your balance due per month (capped at 25% of the back taxes you owe). The interest rate for underpayment of taxes is currently 6% in May of 2019 but can change quarterly. Understanding your options will help you determine what to do if you owe the IRS. That way you can come up with a plan.

What happens if I don’t pay my federal income tax?

If you have failed to pay your federal income tax for two years in a row, the Internal Revenue Service will add penalties and interest to your debt. Eventually, it will take collection action against you. Several different types of penalties apply depending on your circumstances.

What if I owe too much tax?

When you calculate the amount of tax that you owe, after you’ve subtracted however much you had withheld or paid in estimated tax throughout the year, if you haven’t paid in enough tax, the IRS will assess a penalty for underpayment. This penalty is based upon the lesser of two amounts: 100% of the amount of tax you paid for the previous year.

What happens if you can’t pay taxes on time?

Here’s what could happen if you owe taxes and can’t pay them on time: You might face IRS penalties and interest. Even if you can’t pay by tax day, you should still file your return or at least file for a six-month extension. Then, review your options for how you can pay the IRS what you owe.

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