Delinquent Taxes Help From Licensed Tax Agents in Pasadena, CA
A tax bill that goes unpaid does not stay the same size. Every month it sits, the IRS adds to it. At Fresh Start Tax Relief Services in Pasadena, our licensed tax agents help people with delinquent taxes understand what they really owe, slow the growth, and get the account resolved. We are a women-owned business with decades of experience dealing with the IRS, and we have seen how much earlier action can save.
What Makes Taxes Delinquent
Taxes become delinquent when they are not paid by their due date. For most individual income tax returns, that is April 15. An extension gives you more time to file, but not more time to pay, so a balance can become delinquent even when the return itself is on time.
Delinquency also happens when returns are never filed. In that case, penalties for late filing and late payment can both apply, and the IRS may eventually file a return for you that takes no deductions into account.
How a Delinquent Balance Grows
Understanding the math helps explain why a modest balance can turn into a serious problem over a few years.
Late Filing and Late Payment Penalties
The failure-to-file penalty is generally 5% of the unpaid tax for each month a return is late, up to 25%. The failure-to-pay penalty is generally 0.5% per month, also capped at 25%. When both apply in the same month, the filing penalty is reduced by the payment penalty, so the combined charge is generally 5% for that month.
Interest on Top of Penalties
The IRS also charges interest on unpaid tax and on many penalties. The rate equals the federal short-term rate plus 3 percentage points, is adjusted every quarter, and compounds daily until the balance is paid.
When the Rate Changes
The failure-to-pay penalty can rise to 1% per month starting 10 days after the IRS issues a notice of intent to levy. It can also drop to 0.25% per month while an approved installment agreement is in place, as long as the return was filed on time. Those two rules alone show why acting early matters.
Bringing a Delinquent Account Current
The first step is getting every required return filed correctly, because the IRS expects compliance before most resolution programs move forward. From there, we look at what will reduce and resolve the balance.
Penalty abatement can address penalties that have accrued. An
installment agreement can spread the remaining balance into payments you can handle and lower the monthly penalty rate at the same time. For taxpayers who meet certain financial guidelines, an Offer in Compromise may settle the liability for a fraction of what is owed.
How We Work With You
Owing back taxes can feel embarrassing, and many people put off asking for help because of it. We never judge. We listen to how you fell behind, explain your options in plain terms, and handle communication with the IRS for you. You will always get an honest answer about what is realistic.
Serving Pasadena and Clients Nationwide
From our office on East Washington Boulevard, we help clients in Pasadena, South Pasadena, San Gabriel, Glendale, and across Los Angeles County. Our reach extends much further: "Not only do we service every single county in California, but we service taxpayers nationwide." Learn more about our team on the Fresh Start Tax Relief home page.
Frequently Asked Questions
When do taxes become delinquent?
Taxes become delinquent when they are not paid by the due date, which is April 15 for most individual returns. A filing extension does not extend the time to pay.
What is the most the IRS charges in penalties each month?
When both the failure-to-file and failure-to-pay penalties apply in the same month, the combined penalty is generally 5% of the unpaid tax for that month.
How does the IRS set its interest rate?
IRS interest equals the federal short-term rate plus 3 percentage points. It is adjusted quarterly and compounds daily until the balance is paid.
Does the penalty go down if I am on a payment plan?
Yes. The failure-to-pay penalty generally drops to 0.25% per month during an approved installment agreement, provided the return was filed on time.
Can the penalty rate go up?
Yes. The failure-to-pay penalty can increase to 1% per month starting 10 days after the IRS issues a notice of intent to levy.