Tax debt can put individuals and businesses in a difficult position, especially given the extensive enforcement tools available to the IRS. At Moskowitz LLP, we provide practical guidance and effective advocacy for clients who owe money to the IRS.
Your tax balance is not static—interest and penalties continue to accrue and can significantly increase the amount you owe. That’s why it’s critical to address the issue promptly and work toward a resolution. The longer you wait, the more costly the situation becomes.
Get help with your tax situation by contacting the tax resolution team at Moskowitz, LLP at (888) 829-3325. We will assess your circumstances, explain your options, and work directly with the IRS on your behalf.
A Difficult Tax Situation Can Grow Worse by the Day
Whether you want to attempt to handle your back taxes on your own, or hire a tax resolution professional, it’s in your best interest to reach a conclusion as quickly as possible. When you owe money to the IRS, interest and penalties can cause your balance to grow rapidly. This doesn’t mean you should pay amounts you do not owe simply to end the dispute, but you should understand how quickly tax debt can escalate if left unaddressed.
To appreciate the importance of acting promptly, it helps to understand how your balance can increase over time. For example, imagine you owe $25,000 in base tax—whether due to unreported income or disallowed deductions. That figure is only the starting point. The IRS generally does not assess back taxes until some time has passed, and once it does, interest and penalties begin to accumulate on top of the original amount.
The IRS Applies Interest and Penalties to What You Owe
The IRS applies a set interest rate to your tax debt. The IRS announces this rate in advance. Currently, individuals pay interest to the IRS on the money they owe at the rate of 7% per year. Corporations are charged a 6% interest rate, although in some cases, large corporations may face higher interest rates. The interest that you pay compounds over time on a daily basis, which means the amount owed grows over time until the balance is paid in full. Interest applies not only to the original tax owed but also to any penalties and previously accrued interest.
The IRS comes up with the owed tax amount after balances arise from an audit, U.S. Tax Court decision, or when a return is filed with a balance. At the outset, the IRS may apply a penalty to certain underpayments. If you have failed to pay taxes entirely, the IRS assesses penalties at 0.5% per month for each month that you have not paid. This penalty is capped at a maximum of 25% of the total amount of unpaid taxes. The IRS will charge interest on both the unpaid amount and the penalties.
Contact a Tax Resolution Services Firm Today
The experienced tax resolution attorneys, CPAs, and enrolled agents at Moskowitz, LLP can help with any IRS tax issue. Speak with their tax resolution team today to learn how they can address your situation. Schedule an initial appointment by messaging Moskowitz, LLP online or calling (888) 829-3325.
