What You Need to Know About Personal Back Taxes & Tax Debt

If I Owe Taxes Can I Still Get a Refund? Understanding Back Taxes

December 1, 2018

Have you gotten a back tax letter in the mail from the IRS? If you have back taxes with the IRS, are under audit, or have other federal debts your tax refund can be garnished. If you are asking yourself, “If I owe taxes can I still get a refund?” this article is your guide to understanding back taxes and tax appeals.

You can be fully entitled to a refund from your federal income tax, but if you owe the IRS back taxes they can take them out of your refund. In some cases, you can appeal the determination on your back taxes to get the ruling reversed.

This article is your guide, complete with links to the official IRS sources and the necessary tax forms you need to file. Keep reading!

Understanding Back Taxes

First and foremost, if your worry was initiated by a call from someone claiming to be from the IRS, stop worrying-it’s a scam. The IRS does not make official contact with anyone, for any reason, over the phone. If you have not received a notification in writing, in your mailbox from the IRS, they are not contacting you.

If, however, you got a letter from the IRS in the mail, you want to know what you are dealing with. Maybe you simply forgot to pay some of your taxes, maybe your taxes got filed incorrectly, or maybe you knowingly avoid federal income tax. Whatever the reason, the IRS has their finger on your refund.

If I Owe Taxes Can I Still Get a Refund?

So, “If I owe taxes can I still get a refund?” No, you cannot. Your IRS tax refund is automatically put towards your back taxes. The same applies if you make regular payments to an IRS back tax installment plan.

If you owe taxes to the IRS, they garnish your tax refund and put it towards your tax debt. This is true whether you are on a payment plan or not- it all goes to the back taxes. Even so, you have to continue to make your monthly payments regularly, regardless of your tax refund.

The only way to get your tax refund is to get out of your tax debt.

The only circumstance in which you receive a tax refund is if it is larger than your total federal, state, child support, and student loan debt. If your tax refund puts you free and clear of federal and state debt, you will receive the remainder.

Evaluate your tax situation

By evaluating your tax situation, you can identify areas where you may be able to reduce your tax burden and make informed decisions about your financial future.

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Can I Appeal My Back Taxes with the IRS?

Unfortunately, as of the date this post was made, the IRS Appeals webpage is down. Navigating to the “Appeals” page of the “Compliance” menu turns up as a broken page-“ERR_TOO_MANY_REDIRECTS”.

So it is impossible to know what you are missing from the main IRS appeals page, but there are plenty of other working pages about the back tax collection appeals.

You have the choice to appeal your determination in court or within the IRS. The appeals process is different depending on whether you want to settle a dispute within the IRS, or whether you feel that the courts will better serve justice to your case.

The process of appeals within the IRS does not go through a court system, which might seem suspicious. After all, why should you trust the same party accusing you to, then, exonerate you?

Well, actually, the IRS collections department and the IRS appeals department have legal oversight as to limit their contact with each other. Both avenues of appeal work to avoid conflict of interests on the part of the deciding body.

What Qualifies for a Back Tax Appeal?

You can disagree with the IRS for many reasons, but an appeal must fall within the bounds of federal tax law. For example, if an auditor displays outward racial or religious bias against you, it is outside the bounds of the federal tax code.

The same is true with disagreements on constitutional ground. A constitutional discrepancy must be ruled on by a state or federal supreme court. Anything relating to your taxes or audit that resides outside of a designated tax code, you cannot appeal to the IRS.

Any tax-related action the IRS takes towards you is fair game for appealing.

You can appeal if you disagree with an IRS audit, examination, or determination as long as you know the tax code under which it falls. Other common reasons for appeal include:

  • Liens
  • Offers in Compromise
  • Penalty Abatement or Removal
  • Levies
  • Installment Payment Plans
  • Seizures

Do I Need an Attorney to Appeal Back Taxes?

You are not required by law to have an attorney, and if you were then one would be provided. To begin your appeals process, prepare an Appeals Request Form. If you want an attorney to represent your case to the court or IRS Appeals Department, fill out the form 2848 Declaration of Representative to legally specify your power of attorney.

Feel free to contact the IRS Collection Appeals Department with any questions regarding the process of appeals. The appeals department is not interested in collecting your debt. Instead, it focusses on serving those incorrectly targeted by the IRS collections department.

Final Thoughts

An audit, lien, or seizure may seem like it will never happen to you, but it can happen to anyone. You are responsible for your fiscal health, so avoid situations that allow powerful institutions, like the IRS to garnish your money. The only way to avoid back taxes is to pay your taxes on time.

If this article answers your question, “If I owe taxes can I still get a refund?” share it with a friend on social media. And subscribe to our newsletter for more information on personal tax debt. Thanks for reading!

Clinton F Wassor

Clinton F. Wasser, holding a Master of Science in Legal Studies of Taxation, brings a wealth of expertise in tax planning and compliance to his writing. With a career rooted in the workings of the tax landscape, Clinton navigates difficulties with finesse. Beyond his professional accomplishments, he generously volunteers his time to educate high school students about the nuances of taxes. As an author, Clinton marries his real-world experience with a passion for simplifying tax concepts. He has found that his technique empowers readers to better understand the world of taxation.
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