The Back Tax Action Kit

1. Immediate triage

Do these first, in order. None of them commits you to anything; all of them protect your options.

• Find your most recent IRS letter. The notice number in the top or bottom corner (CP14, CP504, LT11, and so on) tells you exactly how far collection has gone.
• Check the date on that letter and any deadline it states. A final notice of intent to levy generally gives you 30 days to request a hearing before the IRS can levy.
• Get your IRS account transcript (free at IRS.gov or by filing Form 4506-T). It shows your real balance, the years involved, and whether any returns are missing.
• List every tax year with a balance or an unfiled return, personal and business, in one place.
• If a levy or garnishment is already in motion, treat this as urgent: deadlines control your appeal rights, and waiting removes options.
• Confirm you are current on this year: withholding or estimated payments, and payroll tax deposits if you have employees. New balances can undo a resolution.

2. The do-not-do list

• Do not ignore final notices. A CP504, LT11, or Letter 1058 starts clocks that protect you only if you act; silence is how paychecks and bank accounts get levied.
• Do not promise the IRS a payment you cannot actually make. A defaulted agreement is worse than none: it restarts collection and burns credibility your case may need later.
• Do not talk to a revenue officer about who controlled the business's money, or sit for a Form 4180 trust fund interview, without representation. Those answers decide personal liability for payroll tax.
• Do not send your only copy of anything. The IRS loses paper; keep originals and send copies.
• Do not pay a firm that quotes a settlement figure before anyone has reviewed your finances. Qualification is a formula; a promise made before the math is a sales tactic.
• Do not file this year late because past years are unfiled. Every new late return adds a new failure-to-file penalty on top of the old ones.

3. Documents to gather

• Every IRS (and state) letter you can find, most recent first.
• IRS account transcripts, or the login for your IRS.gov account.
• Your last filed tax return, personal and business.
• Rough figures for monthly income and monthly living or operating expenses.
• Bank statements for the last 3 months.
• If a business is involved: payroll records and 941 filings, and whether the business is still operating.
• Any prior IRS paperwork: payment plan letters, offer submissions, liens, or levy notices.

4. The 12 questions to answer before any IRS call

Whether you call the IRS yourself or hire help, these are the questions that decide your options. Answer what you can now; the gaps show you what to find out.

1. What is my total balance, and how much of it is penalties and interest rather than tax?
2. Which tax years does the debt cover?
3. Are all of my required returns filed? Which years are missing?
4. What is the most recent notice I received, and what deadline is on it?
5. Has the IRS filed a federal tax lien, or issued a final notice of intent to levy?
6. Is any of the debt payroll tax (Form 941), where personal liability is possible?
7. Did the IRS file a substitute return for me for any year? (These usually overstate what you owe.)
8. What can I realistically pay per month after necessary living or business expenses?
9. Do I have equity in assets (home, vehicles, accounts) the IRS would count?
10. When was each balance assessed? (The IRS generally has 10 years from assessment to collect.)
11. Am I current on this year's withholding, estimated taxes, or payroll deposits?
12. What do I want: lowest total cost, lowest monthly payment, or fastest end to collection pressure?

5. Case worksheet

Fill this in from your notices and transcript, then estimate your payoff with the calculator.

Two statutory anchors while you plan: the IRS generally has 10 years from assessment to collect a tax debt, and the failure-to-pay penalty accrues at 0.5% per month (capped at 25%) while the failure-to-file penalty runs 5% per month (also capped at 25%). Filing, even without paying, stops the larger penalty.