Worried that catching up on your back taxes will put you on the IRS's radar and make you more likely to face an audit? Well, that's a common fear, but fortunately, it's unfounded. The IRS does not audit late-filed returns at higher rates than returns filed on time. 

The IRS has just announced a new Simple Payment Plan. The agency says that 90% of individuals who owe back taxes qualify for this new installment agreement, which gives you up to 10 years to repay up to $50,000 in tax, penalties, and interest. The simple option is designed to make it easier for taxpayers to set up payment plans and avoid unwanted collection actions. 

In April 2025, the IRS sent out Notice LT36 to over half a million federal employees with unpaid taxes. The notice urged recipients to get back into compliance and reminded them of their legal obligations to the United States government. Although this particular IRS notice is new, the effort to get federal workers into tax compliance has been happening for decades. 

Once you reach age 73, the law requires you to take distributions from your traditional IRAs, 401(k)'s, defined benefit plans, and most other types of retirement accounts, except for Roth accounts. If you don't take out the required minimum distribution (RMD), you will incur an excise tax of 25% of the amount you were supposed to withdraw. The penalty drops to 10% if you correct the mistake within two years or before having the tax assessed by the IRS if sooner. 

The IRS will waive penalties in some situations - namely, if you have reasonable cause or a history of compliance over the last three years. However, the agency will only waive certain penalties. Generally, you can get failure to file, failure to pay, and failure to deposit penalties waived, and sometimes even accuracy or civil fraud penalties. But, the IRS is typically not willing to waive other penalties.