{{Short description|Taxes not completely paid when due}} '''Back taxes''' is a term for taxes that were not completely paid when due.<ref>{{cite web|accessdate=2009-03-26|url=http://www.investorwords.com/378/back_taxes.html|title=Back taxes|publisher=Investor Words|archiveurl= https://web.archive.org/web/20090309144139/http://www.investorwords.com/378/back_taxes.html|archivedate=9 March 2009|url-status=dead}}</ref> Typically, these are taxes that are owed from a previous year.<ref>{{cite web|accessdate=2009-03-26|url=http://www.new-york-new-york-real-estate.com/b1.html|title=Glossary B|publisher=New York Real Estate|url-status=live}}</ref> Causes for back taxes include failure to pay taxes by the deadline, failure to correctly report one's income, or neglecting to file a tax return altogether.
A government might implement different approaches to collect back taxes, including criminal charges, offering a voluntary disclosure program that allows a broad variety of payment methods,<ref>{{Cite web|url=http://www.businessdictionary.com/definition/back-taxes.html|title=What are back taxes? definition and meaning|website=BusinessDictionary.com|access-date=2018-04-20|archive-date=2018-04-21|archive-url=https://web.archive.org/web/20180421030557/http://www.businessdictionary.com/definition/back-taxes.html|url-status=dead}}</ref> or tax liens.
If the taxes remain unpaid, the tax authority could use a tax levy to legally seize the taxpayer's assets (such as bank accounts, investment accounts, automobiles, and real estate) to collect the money it is owed.
==United States== In the United States, unpaid taxes can be owed at federal, state, and/or local government levels, so are assessed by them. Paying the full amount of tax debt as soon as possible is always the least expensive option for the taxpayer because of penalties and interest accumulation. In 2016, the Internal Revenue Service (IRS) began a new private collection program of certain overdue federal tax debts. The new program authorized designated contractors to collect, on the government's behalf, outstanding inactive tax receivables.<ref>{{cite report |author=U.S. Government Accountability Office |title=Private Debt Collection Program: IRS Could Improve Results and Better Promote Equitable Outcomes for Taxpayers |id=GAO-24-106140 |year=2024 |url=https://www.gao.gov/products/gao-24-106140 |access-date=2026-05-22}}</ref> By an offer in compromise, taxpayers lacking the means to repay taxes may negotiate a lesser settlement with the IRS.<ref>{{Cite news|url=https://www.investopedia.com/terms/b/back-taxes.asp|title=Back Taxes|date=2008-10-05|work=Investopedia|access-date=2018-04-20}}</ref>
The consequences for not paying one's back taxes differ. The IRS may send written notices regarding back taxes, and usually expects a response in 30–60 days. A penalty fee is issued if the taxes remain unpaid.<ref>{{cite web|title=The 8 Most Common IRS Tax Penalties and How to Avoid Them|url=https://www.brscpa.com/cpa-services/irs-problem-resolution/the-8-most-common-irs-tax-penalties-and-how-to-avoid-them/|archive-date=2021-09-16|access-date=2024-04-25|archive-url=https://web.archive.org/web/20210916200137/https://www.brscpa.com/cpa-services/irs-problem-resolution/the-8-most-common-irs-tax-penalties-and-how-to-avoid-them/}}</ref> The minimum penalty fee is $135. Also, one has to pay interest on the unpaid taxes. The interest rate is usually determined by the federal short-term rate.<ref>{{cite web |url=https://www.irs.gov/payments/failure-to-pay-penalty |title=Failure to Pay Penalty |publisher=Internal Revenue Service |access-date=2026-05-22}}</ref>
The IRS can summon taxpayers, which is a legal requirement for the taxpayer to visit an IRS officer and bring appropriate records and documents. A third party with relevant information about the case, such as a record keeper from a financial institution, can also be summoned by the IRS. If one has a right to tax refunds, the IRS will not hand the refund to the taxpayer until he or she has repaid the back taxes. Other, more severe consequences are losing ground on one's credit report, having one's property seized, declaring bankruptcy, and serving jail time. <ref>{{Cite news|url=http://www.businessinsider.com/what-could-happen-if-you-dont-do-your-taxes-2016-4|title=12 terrible things that could happen if you don't do your taxes|work=Business Insider|access-date=2018-06-19}}</ref>
Alongside recovery of unpaid balances, the IRS uses pre-emptive measures to limit the accrual of new back taxes. When a payee fails to furnish a correct Taxpayer Identification Number on Form W-9 to a business making reportable payments, the payer must apply backup withholding at a flat 24 percent rate to those payments and remit the amounts to the IRS.<ref>{{cite report|publisher=Internal Revenue Service|title=Backup Withholding for Missing and Incorrect Name/TIN(s)|id=Publication 1281|url=https://www.irs.gov/pub/irs-pdf/p1281.pdf|date=December 2023}} {{Cite web|title=Form IRS W-9|url=https://w9.pdffiller.com/|access-date=2026-05-22}}</ref>
==United Kingdom== HM Revenue and Customs (HMRC) follows a graduated enforcement process for unpaid taxes that may begin with reminder notices and escalate to the use of private debt-collection agencies, a Time to Pay arrangement permitting payment by instalments, taking control of goods under Schedule 12 of the Tribunals, Courts and Enforcement Act 2007, a statutory demand, and, for companies, a winding-up petition under section 122(1)(f) of the Insolvency Act 1986.<ref>{{cite web|url=https://www.gov.uk/guidance/what-will-happen-if-you-do-not-pay-your-tax-bill|title=What will happen if you do not pay your tax bill|publisher=HM Revenue and Customs|access-date=2026-05-22}}</ref> HMRC's statutory recovery period for tax arrears is at least six years, and longer where there is evidence of avoidance or fraud.<ref>{{cite web|url=https://www.citizensadvice.org.uk/debt-and-money/help-with-debt/dealing-with-urgent-debts/dealing-with-income-tax-arrears/|title=Dealing with income tax arrears|publisher=Citizens Advice|access-date=2026-05-22}}</ref>
==References== {{reflist}}
Category:Tax
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