Back Tax Help
Owing years of back taxes is overwhelming — but there is a clear path forward, and we know the way.
Resolving Back Taxes With the IRS
Whether you owe one year or ten years of back taxes, the IRS has programs to help you resolve your debt — and the sooner you act, the better your options. Ignoring back taxes only makes the situation worse as penalties and interest compound daily.
How We Help With Back Taxes
- Compliance Review — We pull your IRS transcripts to get a complete picture of what is owed and why
- Resolution Strategy — We identify the right program: OIC, installment agreement, CNC, or penalty abatement
- Negotiation — We communicate directly with the IRS on your behalf
- Protection — We take steps to stop levies, liens, and garnishments while your case is pending
Consequences of Ignoring Back Taxes
- Federal tax liens on your property and credit
- Wage garnishment (IRS can take up to 70% of your paycheck)
- Bank account levies
- Seizure of assets including vehicles and real estate
- Loss of passport for debts over $62,000
The 10-year IRS collection statute means the IRS has a limited window to collect — but they will use every tool available during that time. Let us help you navigate this process.
What Happens When You Owe Back Taxes
When you fall behind on your taxes, the IRS follows a predictable enforcement timeline. It starts with notices and letters demanding payment. If those go unanswered, the IRS can file a federal tax lien against your property, issue levies on your bank accounts, garnish your wages, and in extreme cases, seize your assets. The longer you wait to address back taxes, the more penalties and interest accumulate, and the more aggressive the IRS becomes in its collection efforts.
IRS Collection Programs for Back Taxes
Installment Agreements
If you owe less than $50,000, you may qualify for a streamlined installment agreement that allows you to pay your balance over up to 72 months without the IRS requiring detailed financial disclosure. For balances above $50,000, HofflerSmith negotiates non-streamlined installment agreements that take your actual ability to pay into account, often resulting in lower monthly payments than the IRS would initially demand.
Partial Payment Installment Agreements
If you cannot afford monthly payments that would fully satisfy your debt within the collection period, a Partial Payment Installment Agreement (PPIA) may allow you to make reduced payments. Under a PPIA, you pay what you can afford each month, and any remaining balance after the Collection Statute Expiration Date is written off.
Offer in Compromise
For taxpayers who qualify, an Offer in Compromise allows you to settle your entire tax debt for less than the full amount owed. This is often the best option when the total debt significantly exceeds what the IRS could reasonably collect over time. HofflerSmith has extensive experience preparing OIC applications that meet IRS acceptance criteria.
Currently Not Collectible Status
If paying anything toward your tax debt would create genuine financial hardship, the IRS may designate your account as Currently Not Collectible, suspending all enforcement actions until your situation improves.
Penalties and Interest on Back Taxes
The financial impact of ignoring back taxes is significant. Late filing penalties run 5 percent per month up to 25 percent of the unpaid tax. Late payment penalties add another 0.5 percent per month up to 25 percent. Interest compounds daily at the federal short-term rate plus 3 percent. On a $20,000 tax debt, penalties and interest can add $10,000 or more within just a few years. Addressing back taxes promptly minimizes these additional costs and preserves more resolution options.
Steps to Resolving Your Back Tax Situation
Our approach to resolving back taxes follows a systematic process. First, we pull your IRS transcripts to establish exactly what you owe, including all penalties and interest. We then ensure all unfiled returns are prepared and submitted, because the IRS will not negotiate a resolution while you have outstanding filing requirements. Next, we analyze your financial situation to determine which resolution program gives you the best outcome. Finally, we prepare and submit the appropriate applications and handle all IRS communications on your behalf.
Frequently Asked Questions About Back Taxes
How far back can the IRS go to collect back taxes?
The IRS generally has 10 years from the date a tax is assessed to collect. This is called the Collection Statute Expiration Date. However, certain events such as filing an OIC, requesting an installment agreement, or filing for bankruptcy can pause or extend this clock.
What if I cannot afford to pay anything right now?
You still have options. Currently Not Collectible status can halt all collections, and an Offer in Compromise may allow you to settle for significantly less. The worst thing you can do is avoid the situation entirely.
Will I go to jail for owing back taxes?
Owing taxes alone is not a criminal offense. Tax evasion, which involves deliberately concealing income or assets, is criminal. Simply falling behind on your taxes and working to resolve the situation is a civil matter. The IRS wants to collect money, not imprison taxpayers who are making good-faith efforts to resolve their obligations.
Do not let back taxes control your life any longer. Contact HofflerSmith Financial at (856) 740-4912 for a free, confidential consultation. Our Cherry Hill, NJ Enrolled Agents will review your situation and map out a clear path to resolution.
IRS Collection Programs
Installment Agreements
If you owe less than $50,000, you may qualify for a streamlined installment agreement over up to 72 months. For larger balances, HofflerSmith negotiates non-streamlined agreements based on your actual ability to pay.
Partial Payment Installment Agreements
If you cannot fully satisfy your debt within the collection period, a PPIA allows reduced monthly payments with the remaining balance written off after the Collection Statute Expiration Date.
Offer in Compromise
Settle your entire tax debt for less than the full amount owed. Best when total debt significantly exceeds what the IRS could collect over time.
Currently Not Collectible Status
If paying anything would create genuine hardship, the IRS may suspend all enforcement until your situation improves.
Penalties and Interest
Late filing penalties run 5 percent per month up to 25 percent. Late payment penalties add 0.5 percent per month. Interest compounds daily. On a $20,000 debt, penalties and interest can add $10,000 or more within a few years.
Our Resolution Process
We pull your IRS transcripts to establish exactly what you owe. We file any unfiled returns. We analyze your finances to determine the best resolution program. We prepare and submit applications and handle all IRS communications.
Frequently Asked Questions
How far back can the IRS collect?
Generally 10 years from the date tax was assessed. Certain events can pause or extend this clock.
What if I cannot pay anything?
Currently Not Collectible status can halt collections. An Offer in Compromise may let you settle for less. The worst thing is to avoid the situation.
Will I go to jail?
Owing taxes is not criminal. Tax evasion is. Simply falling behind and working to resolve it is a civil matter.
Do not let back taxes control your life. Contact HofflerSmith at (856) 740-4912 for a free consultation.
Ready to Resolve Your Tax Issue?
HofflerSmith is a family-owned firm in Cherry Hill, NJ. We represent individuals and businesses directly with the IRS — so you don’t have to face this alone.
Back Taxes and Your Credit: What You Need to Know
Owing back taxes does not automatically appear on your credit report, but the consequences of unresolved tax debt can severely affect your financial life. When the IRS files a federal tax lien against your property, it becomes a matter of public record that can impact your ability to obtain credit, buy a home, or refinance existing loans. Lenders view federal tax liens as a serious risk factor, and many will decline applications from borrowers with active liens regardless of their credit score.
Resolving your back taxes and having liens released is essential to restoring your financial health. At HofflerSmith Financial, we work to resolve your tax debt as quickly as possible and ensure that any liens are properly released once the obligation is satisfied, giving you a clear path to financial recovery.
Special Circumstances: Divorce, Inheritance, and Back Taxes
Life events like divorce and inheritance can create unexpected back tax situations. In divorce, both spouses may be jointly liable for taxes owed on returns they filed together during the marriage, even if only one spouse earned the income or caused the tax problem. Innocent Spouse Relief may protect you if your former spouse understated income or claimed improper deductions without your knowledge.
Inherited tax debt is another common concern. While federal tax debt generally does not pass to heirs personally, the IRS can collect from the deceased person estate before assets are distributed to beneficiaries. If you have inherited property with a tax lien attached, or if you are the executor of an estate with outstanding tax obligations, professional guidance is essential to protect your interests.
HofflerSmith Financial has helped numerous Cherry Hill and South Jersey residents navigate these complex situations. We evaluate your specific circumstances, determine your actual liability, and pursue every available remedy to minimize what you owe.
Back Taxes for Self-Employed Individuals and Independent Contractors
Self-employed individuals are disproportionately affected by back tax problems because they are responsible for paying both the employee and employer portions of Social Security and Medicare taxes, which totals 15.3 percent on top of regular income tax. Many freelancers, gig workers, and independent contractors fall behind on quarterly estimated payments, and the resulting tax debt compounds rapidly with penalties and interest.
The good news is that self-employed taxpayers often have significant unreported deductions that can reduce their actual tax liability when unfiled returns are properly prepared. Home office expenses, vehicle mileage, equipment, software, professional development, and health insurance premiums are among the deductions that are frequently overlooked. Filing accurate returns that claim all available deductions can substantially reduce your back tax balance before we even begin negotiating a resolution.
HofflerSmith Financial specializes in preparing unfiled returns for self-employed individuals and then pursuing the most favorable resolution for the remaining balance. Our combined expertise in tax preparation and IRS negotiation means we handle every aspect of your back tax situation under one roof.
The IRS Fresh Start Program and Back Taxes
The IRS Fresh Start Initiative, introduced in 2011 and expanded since then, made it easier for taxpayers with back taxes to resolve their obligations. Key provisions include raising the threshold for streamlined installment agreements from twenty-five thousand to fifty thousand dollars, expanding access to Offers in Compromise by revising the formula used to calculate reasonable collection potential, and reducing the financial disclosure requirements for certain payment plans.
Under the Fresh Start provisions, more taxpayers qualify for manageable payment plans, and more offers are accepted at amounts that taxpayers can actually afford. However, navigating the application process and presenting your financial situation in the most favorable light still requires professional expertise. The IRS does not volunteer information about which programs you qualify for or how to maximize your benefits.
HofflerSmith Financial leverages every Fresh Start provision available to reduce your back tax burden and establish a resolution plan that works within your actual financial means. Our Enrolled Agents stay current with every IRS policy change to ensure our clients receive the maximum benefit available under current guidelines.
Protecting Your Wages, Bank Accounts, and Property from the IRS
If you owe back taxes, one of the most urgent concerns is preventing the IRS from taking collection action against your income and assets. A wage garnishment, or levy, can take a significant portion of your paycheck, sometimes up to seventy percent, leaving you unable to cover basic living expenses. Bank levies freeze your account for 21 days and then seize the available funds, potentially causing checks to bounce and automatic payments to fail.
If you are currently facing an active levy or garnishment, HofflerSmith Financial can often get it released within days by contacting the IRS, demonstrating financial hardship, or establishing a resolution plan. If you have not yet received collection notices but owe back taxes, taking proactive steps now is the best way to prevent these disruptive collection actions from occurring in the first place.
How Long Does It Take to Resolve Back Taxes?
The timeline for resolving back taxes depends on the complexity of your situation and which resolution program is appropriate. If you need to file multiple years of unfiled returns, the preparation work can take two to six weeks depending on how much documentation is available. Once returns are filed and the IRS processes them, we can begin pursuing a resolution.
Streamlined installment agreements for balances under fifty thousand dollars can typically be set up within two to four weeks. Non-streamlined agreements and partial payment plans may take four to eight weeks as the IRS reviews your financial disclosure. Offers in Compromise are the longest process, averaging six to twelve months from submission to decision, though your account is protected from collection activity during the entire review period.
HofflerSmith Financial works efficiently to resolve every case as quickly as possible. We prepare complete, well-documented submissions that minimize IRS processing delays and reduce the likelihood of follow-up requests that can extend the timeline. Our goal is to give you peace of mind as quickly as we can while achieving the best possible outcome for your situation.
Why Cherry Hill and South Jersey Residents Trust HofflerSmith for Back Tax Help
HofflerSmith Financial has been serving the Cherry Hill and greater South Jersey community for years, helping individuals and businesses resolve their back tax problems with the IRS and the State of New Jersey. As a family-owned firm staffed by Enrolled Agents, we combine the technical expertise needed to navigate complex tax situations with the personalized attention that national firms simply cannot provide.
Our clients come from Cherry Hill, Voorhees, Marlton, Mount Laurel, Moorestown, Haddonfield, Collingswood, and communities throughout Camden and Burlington counties. Many find us after negative experiences with large tax relief companies that charged thousands of dollars in fees without delivering meaningful results. At HofflerSmith, we take the time to understand your specific situation, explain your options clearly, and work alongside you until your back tax problem is fully resolved.
If you owe back taxes and are ready to take the first step toward resolution, call HofflerSmith Financial at (856) 740-4912 for a free, confidential consultation. We will review your IRS records, explain your options, and give you a clear picture of what resolution looks like for your specific situation.