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How to find Past Due Balances and Back Taxes Owed
If you fail to file or pay your taxes on time or in full, the IRS will send you notices known as “CP Letters.” The IRS will typically contact you 60 days after the April 15th (April 18th in 2016) tax filing deadline, or send letters to your last-known address. Hiccups in the notification process are becoming less common due to the continuous improvements made to the Automated Collections System (ACS). It is important to know precisely what you owe so that you can properly deal with your situation and understand which tax solution is best for you.
Ways to Determine How Much You Owe the IRS in Taxes
- Visit or Call Your Local IRS Office: There are local IRS offices all over the country, making it easy for you to call or visit an IRS official in your area. Since the IRS may ask you to resolve your taxes in a specific manner when you visit your local office, you may want to consider contacting a professional beforehand to be sure that your best interests are at hand. The IRS should provide you with either your IRS Transcript or your Record of Account when you arrive at your local office. Alternatively, you can call the national IRS office at 1-800-829-1040, but in most cases, it will take 1-2 weeks for them to deliver your records to you.
- Contact a Professional Tax Team: A tax attorney, CPA, EA or other tax professional can typically act on your behalf or represent you through power of attorney to find out how much you owe the IRS. They can also offer you advice on the best way to resolve your back tax situation. It is always beneficial to work with a professional if you know that you owe more than $10,000 because normally fees cannot be as easily justified at amounts below this level.
- Request a “Record of Account”: Here you will use Form 4506-T, titled the “Request for Transcript of Tax Return” form, to obtain the total tax liabilities, payments and adjustments on your account for a particular year. Your Record of Account will tell you the balances (if any) for each tax period. Your tax professional can also request this documentation on your behalf. Many people confuse this with Form 4506, which is used to obtain a full copy of a tax return and any included attachments dating back more than 4 years, and costs $57 dollars per year requested. On the other hand, Form 4506-T can provide you with the following information summary:
- Tax returns and account transcripts with tax information for the current year, as well as the past three years
- A Record of Account (federal tax liabilities, federal payments received and other adjustments).
How to Request Your IRS Record of Account and IRS Account Transcript
- Download and print Form 4506-T, or call the IRS and ask them to send it to you
- Fill out your basic contact information at the top
- Indicate individual income tax (1040), partnership (1065), or business (940) on Line 6
- Check C for requesting a Record of Account; Check B if you want an Account Transcript
- On Line 9, indicate which years you want to look at (if more than four, use Form 4506)
- Sign, date and send Form 4506-T to the correct IRS address (find it on Page 2 of the form)
*If you are not being helped by a tax professional, it is recommended that you read and pay close attention to the instructions provided on Form 4506-T. It should take you approximately 45 minutes to complete and submit the form.
Now that you have a better understanding of how to determine exactly what you owe, look to work with a professional tax team. This is especially important if your IRS debt amount is more than $7,500, since not only does that make the services more cost-effective, but sometimes you can reduce the total amount you owe.
Do you have questions about past due or back taxes? Use this thread to connect with others that may have the same questions or answers.
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