Back taxes, unpaid taxes and unfiled tax returns are handled by the Internal Revenue Service. The IRS has been empowered by law to charge you large penalties and high interest for any taxes they figure are owed.
Why Are They Important?
The IRS has been empowered by law to charge you large penalties and high interest for any taxes they figure are owed. Fixing a back tax case allows you to settle the matter, which can stop further penalties and interest on the amount you owe as well as protect your assets from being frozen or seized.
How Prevalent are Back Taxes
Sometimes a person receives a lump sum payment from an inheritance, or a settlement, or a lottery or a casino jackpot, and they can end up owing back taxes if they do not properly figure and pay the appropriate amount of tax when due.
According to the Internal Revenue Service, approximately twenty percent of the taxpayers in the United States either owe back taxes or are late in filing a tax return (to at least avoid being late, see our pointers about how to file for a tax extension).