Unpaid & Back Taxes

Stop the Penalties. Protect Your Assets. Get Back in Control.

Owing back taxes to the IRS or state tax authorities can feel like a financial hole that gets deeper every month. The constant letters, the stress, and the fear of wage garnishment or bank levies can be overwhelming.

At Alan Goldstein & Associates, we specialize in helping individuals and businesses resolve unpaid tax balances. We don’t judge your past—we fix your future.

Understanding the Problem: Why Back Taxes Grow

It is critical to understand that an unpaid tax balance does not sit still. Whether you owe from a single tax year or multiple years, the debt compounds rapidly due to interest and penalties. Here is how the IRS calculates what you owe.

1. Statutory Interest (Compounded Daily)

The IRS charges interest on any unpaid tax from the original due date of the return, regardless of whether you filed an extension . This interest is compounded daily, meaning each day’s interest is added to your balance, and the next day’s interest is calculated on that larger amount .

For individual taxpayers, the underpayment interest rate is determined quarterly. It is calculated as the federal short-term rate plus 3 percentage points . For the first quarter of 2026, the rate for individual underpayments is 7% per year .

What this means in practice: At a 7% annual rate, a $10,000 balance left unpaid for one year accrues approximately **$725 in interest alone** . A $25,000 balance accrues roughly **$1,813** over the same period . Because the rate changes quarterly, a multi-year balance may accrue interest at several different rates over time.

2. Failure-to-Pay Penalty (Monthly)

Even if you filed your return on time, you are subject to the failure-to-pay penalty if you did not pay the tax owed by the due date .

  • Standard Rate: 0.5% of the unpaid tax per month (or part of a month), up to a maximum of 25% .
  • Increased Rate: If the IRS issues a final notice of intent to levy or seize property and you do not pay within 10 days, the rate increases to 1% per month .
  • Reduced Rate: If you enter into an approved installment agreement, the penalty rate is reduced to 0.25% per month while the agreement is in effect .

3. Failure-to-File Penalty (If Applicable)

If you did not file your return at all (or filed late), an additional penalty applies. This is the most aggressive charge:

  • Standard Rate: 5% of the unpaid tax per month (or part of a month) that the return is late, up to a maximum of 25% .
  • Combined Penalty Rule: When both the failure-to-file and failure-to-pay penalties apply in the same month, the failure-to-file penalty is reduced to 4.5% for that month, so the combined total is 5% rather than 5.5% .
  • Maximum Combined Penalty: If both penalties run their full course, the total penalty can reach 47.5% of the original unpaid tax (22.5% for late filing + 25% for late payment) .
  • Minimum Penalty for Long Delays: If your return is more than 60 days late, the minimum failure-to-file penalty is the smaller of $525 (for returns required to be filed in 2026) or 100% of the tax owed .

Important: Filing on time—even if you cannot pay—avoids the failure-to-file penalty entirely, which is ten times steeper per month than the failure-to-pay penalty.

4. Other Potential Penalties

Depending on your situation, additional penalties may apply:

  • Estimated Tax Penalty: If you did not pay enough tax through withholding or estimated payments during the year .
  • Deposit Penalties (Businesses): For payroll or employment taxes not deposited on time, penalties range from 2% to 15% depending on how late the deposit is made .
  • Trust Fund Recovery Penalty (Businesses): For willful failure to pay withheld employee taxes, responsible individuals can be held personally liable for 100% of the unpaid trust fund portion .

Why Choose Alan Goldstein & Associates?

  • Expert Negotiation: We know the IRS guidelines and how to present your case to get results.
  • Relief from Fear: We handle all communication with the IRS so you can sleep at night.
  • Tailored Strategies: We analyze your income, expenses, and assets to recommend the best solution for your situation.

Take the First Step Toward Financial Freedom

The penalties will not stop until you act. Don’t let your back taxes turn into a wage garnishment or a bank levy.

Contact Alan Goldstein & Associates today for a confidential consultation. Let us help you settle your unpaid taxes and get back to living your life.