You may not even know that you owe back taxes to the IRS or the state! If you have moved (or your business has moved), for example, then you may not have received any mailed notices from the tax authorities. More often than not, tax laws are changed or new tax laws are passed. If your accounting processes aren't fully compliant with a new tax structure, your business may be digging itself deeper into a tax hole every day unknowingly!

Knowing whether you owe tax is not just an issue for companies and businesses. If you are self-employed and you do not pay enough self-employment tax with your quarterly tax estimates, for example, then you may owe back taxes to the IRS.

Contact the IRS and any relevant state jurisdictions, in writing, if you have any questions about returns filed for previous tax years. Be prepared with information such as W-2's, receipts, and tax worksheets which can help you establish the correct amounts of revenue and expenses for that period.

Don't take it personally

2009, Sarah Palin, State Governor of Alaska
Evidently the value of her travel and expense account is supposed to be taxed as income (the state has paid her thousands in per diem allowances). But she's not saying how much she owes in back taxes. "The amount of taxes owed is a private matter," said Palin's spokeswoman, Sharon Leighow, according to The Anchorage Daily News.

Huh? Private matter? Why is it not a public matter when the state pays taxpayer money to an elected official such as the governor, and then that elected official does not report the money as taxable income?

2008, Dionne Warwick, Singer
The California Franchise Tax Board believes Ms. Warwick owes over $2.5 million in state back taxes according to a 2008 article in USAToday.

1994, Catalina Vásquez Villalpando, Treasurer of the United States
Ms. Villalpando served as Treasurer of the U.S. under President George Bush. She was convicted of tax evasion while in office and served prison time. Sources say she owes $168,000 to the District of Columbia in back taxes.

If her name seems familiar, it's probably because you have seen her signature on circulating US currency bills.