What Are Delinquent Taxes? Delinquent Taxes Definition for Taxpayers

Unpaid Taxes

Delinquent taxes refer to any unpaid taxes. Tax delinquency occurs as soon as you miss the deadline to file a tax return or pay the taxes due. Any type of tax can become delinquent. Once taxes are late, the taxing authority generally starts adding on interest and penalties.

For instance, if you have unpaid federal income taxes, you have a tax delinquency with the IRS. If you have unpaid property taxes, you have a tax delinquency with your county tax assessor. In other words, any unpaid tax debt is a delinquent tax.

This guide looks at the delinquent tax definition. Then, it briefly outlines what can happen if you have unpaid taxes and what to do if you owe taxes.

What Is the Delinquent Tax Definition?

The meaning of a delinquent tax is a tax that is due but not yet paid. A tax can be delinquent if the return is not filed. It is also delinquent if the return has been filed, but the tax hasn't been paid. Delinquent means in arrears or late.

What Is Considered Delinquent Federal Tax Debt?

Delinquent federal tax debt specifically refers to taxes that you owe the IRS. This can include any late federal tax such as income tax, payroll tax, or excise tax. Both businesses and individuals can have delinquent federal tax debt.

What Happens If You Have Delinquent Taxes?

If you have delinquent federal income taxes, the IRS will assess penalties and interest on your account. The IRS can also use a variety of techniques to collect the unpaid taxes. In particular, the agency may do the following to collect your tax liability:

Issue Tax Liens

Tax liens are a taxing authority's legal claim to your assets. Once a lien is in place, you won't be able to sell your assets without paying the proceeds to the IRS. You also won't be able to take out loans against your assets unless the IRS agrees to subordinate the tax liens. The lien is a public record so anyone can see it.

Seize Your Assets

The IRS can seize the funds in your bank accounts, garnish your wages, or seize your real or personal property when you have unpaid taxes. These are called tax levies.

Take Your Passport

If you have severely delinquent taxes, the IRS can tell the State Department to suspend your passport or refuse to issue you a passport. This can make it impossible to travel or carry on certain types of business.

The consequences of a tax delinquency vary based on the type of taxes involved. For instance, if a property owner fails to pay property tax, they have delinquent property taxes, and the county tax collector can auction off their property to the highest bidder. This is why property taxes are often rolled into mortgage payments — to prevent the owner from falling behind. But in areas with the highest property taxes, property owners often get behind.

Additionally, the consequences of unpaid taxes can vary based on where you live. For instance, some states issue a tax warrant when you fail to pay state taxes or have delinquent property taxes. A tax warrant doesn't have anything to do with arresting you. Instead, a tax warrant is just another name for a tax lien. When a delinquent account leads to a tax warrant, the local sheriff typically has the right to seize your assets and sell them in a public auction.


What Should You Do If You Owe Delinquent Taxes?

If you owe taxes, you need to contact the taxing authority that you owe money to. For instance, if you owe property tax, you should contact your local county. You should contact your state revenue agency if your business owes sales tax. If you owe state income taxes, you should contact your state tax agency. You should contact the IRS and talk with a revenue agent if you have delinquent IRS taxes.

Ideally, however, you should contact a tax pro to help you. This is especially important if you owe a lot or have a complicated situation. Here are the main tax relief options for people with delinquent IRS taxes:

Apply for a Payment Plan

The IRS can put you on a repayment schedule that lasts for up to six years or even seven years in some cases. The payment agreement requires you to make monthly payments until the tax debt is paid in full.

Request an Offer in Compromise

An offer in compromise is when the IRS lets you pay off your tax debt for less than you owe. The payment agreement for an OIC requires you to make one lump sum payment or you can pay installments for up to 24 months. You have to provide a financial statement with detailed taxpayer information to prove that you're paying the most amount of money possible.

Seek Penalty Abatement

Penalty abatement can be combined with other resolution options. There are significant penalties when you miss the due date for filing or paying your taxes. But if this is the first time that you have missed the due date, you can often get the penalties waived.

Request Hardship Status

The IRS can be very strict when people miss due dates, but the agency isn't completely unreasonable. If you truly cannot afford to pay, you can request hardship status. Then, the IRS will stop collection actions until your financial situation changes.

Look Into Additional Relief Options

Other relief options only come into play in specific circumstances. For instance, if the tax liability is exclusively due to your spouse or former spouse, you may qualify for innocent spouse relief. If the tax liability isn't legitimate or if forcing you to pay it wouldn't be fair, you may qualify for an offer in compromise based on doubt as to liability or fair tax administration. These programs have strict rules though so taxpayers would work with a pro if they want to apply. 

Keep in mind that the options can vary based on how much you owe. Not sure how much you owe to the IRS? Here is how to find out what you owe in unpaid taxes. Here's one bit of good news — the IRS only has ten years to collect unpaid taxes. Once that statute of limitation passes, the IRS cannot collect, but the agency often gets aggressive as the deadline approaches.

If you have received an adverse letter from the IRS or any other tax agency about unpaid taxes or unfiled returns, you should get help as soon as possible. Remember that if you're dealing with unpaid state or local taxes, you should reach out to a local professional. They understand the specific tax rules and codes in your state and can help you get the best resolution possible for your situation.

Get Help With Unpaid Taxes

To find a qualified local professional to help with unpaid taxes or unfiled returns, search TaxCure today. We host a directory of tax professionals from around the country. You can search based on your area. You can also narrow down the results to find someone with experience. 

Don't let the IRS come after you and take your assets or use other collection actions against you. Instead, use TaxCure to find help today. You can find help for federal, state, and local taxes.

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