Address back taxes sooner rather than later this season

For some, the new tax season might serve as a stressful reminder of past taxes that have yet to be filed and paid. Taxpayers owed over $120 billion in back taxes, penalties and interest in 2022, according to the

IRS. And there soon may be more concrete reminders coming: The IRS resumed sending automated collection notices for unpaid taxes in 2024 after pausing them “due to the unprecedented effects of the COVID-19 pandemic” in February 2022.

If you’re one of the many taxpayers who owe tax debt this season, addressing the issue sooner rather than later can save you from penalties, interest and other more serious consequences. And you can get started even if you can’t afford to pay in full. Here’s what you can do to get back on track.

If you get a notice, read it

The longer you delay reading and responding to unpaid tax notices, the more serious your tax situation could become.

“People come into our office, and they have all these unopened letters,” says Kenneth Portera, an enrolled agent and owner of Kenneth Portera and Associates in New Jersey who works with clients who owe back taxes. He wishes people would open these notices when they arrive, he notes. “If you do get a letter, open it up and find out what’s going on.”

If you continue to ignore notices, the IRS might resort to severe measures, including tax liens, wage garnishment, asset seizure and passport restrictions. And if you owe state taxes, you could face additional collections and garnishments.

But the IRS and state tax agencies will always try to contact you before escalating to more extreme measures. If you show the agency that you’re willing to pay — even if it’s not the full amount — you can avoid the worst outcomes.

Set up a payment plan

Most taxpayers can set up short- or long-term payment plans, including installment agreements, through the IRS website.

To apply for one online, you must owe less than $50,000 in combined tax, penalties and interest for a long-term plan or less than $100,000 for a short-term plan. The agency waives setup fees for low-income taxpayers and has options for businesses, too.

Contact a pro

Not everyone with overdue taxes needs a tax attorney. But if you’re dealing with tax authorities, owe large amounts of money or have a tax situation that you feel unable to handle on your own, Portera recommends enlisting the help of a licensed tax professional, such as a certified public accountant, enrolled agent or tax attorney.

When you don’t file your return, the IRS puts together a substitute return for you with a proposed assessment of what you owe. This tax return the IRS files for you is “almost always going to be not in your favor,” says Robert Persichitte, a CPA at Delagify Financial in Colorado who has experience working with clients in urgent tax situations.

According to Persichitte, some tax preparers will look at your substitute return for free and tell you if it needs to be amended. Sometimes, a licensed tax professional can negotiate with the IRS to reduce the amount you owe. In serious cases, they might help you apply for an offer in compromise, an agreement with the IRS that settles your tax liability at a lower amount.

Don’t forget about current tax returns

When taking care of overdue taxes, don’t forget to file taxes for 2023.

Even if you have overdue penalties — or don’t have the funds to pay this year’s fees in full — stay compliant with the IRS by filing your returns annually. The agency is much more likely to waive your penalties or even agree to reduce your tax debt if you have a history of compliance.