Financial obligations are an integral part of property ownership, and when it comes to taxes, even the most diligent property owners can find themselves facing challenges. One such challenge is the need to pay back taxes on property, a situation that can arise due to various reasons. Furthermore, the prospect of an Internal Revenue Service (IRS) audit can be an anxiety-inducing experience for anyone. In this article, we will explore the intricacies of paying back taxes on property and shed light on the process of navigating an IRS “Internal Revenue Service audit”.

Paying Back Taxes on Property: Understanding the Basics

When property owners neglect or miscalculate their tax obligations, they can find themselves owing back taxes on their properties. Back taxes are taxes that were not paid in a previous tax period, leading to an accumulated debt. There are several common scenarios that may result in owing back taxes:

  1. Missed Payments: Failure to pay property taxes on time can lead to accumulating back taxes. Property tax payments are often due annually or semi-annually, and missing these deadlines can lead to penalties and interest charges.
  2. Assessment Errors: Sometimes, local tax authorities might make errors in assessing the value of a property, which in turn affects the amount of property taxes owed. Property owners may find themselves owing back taxes if a reassessment results in a higher tax liability.
  3. Change in Property Usage: If the usage of a property changes (e.g., from residential to commercial), it can lead to changes in property tax rates and calculations. Failure to adjust tax payments accordingly can result in back taxes.
  4. Appeals and Disputes: Property owners who dispute their tax assessments might face a situation where they owe back taxes while the appeal is being resolved.

Steps to Address Back Taxes on Property

  1. Assessment Verification: If property owners believe there has been an error in assessing their property value, they should promptly contact their local tax authorities to rectify the situation.
  2. Negotiation and Payment Plans: Many tax authorities offer options for property owners to negotiate a repayment plan for back taxes. These plans allow property owners to pay off their debt over time, making it more manageable.
  3. Penalty and Interest Assessment: Property owners should be aware that back taxes often come with penalties and interest charges. Clear communication with tax authorities can sometimes lead to a reduction in these charges.
  4. Property Tax Exemptions and Abatements: Researching potential exemptions and abatements that apply to the property can help reduce overall tax liability and potentially address back taxes.

Facing an IRS Audit: A Closer Look

An IRS audit can instill fear and uncertainty in even the most responsible taxpayers. An audit is a comprehensive review of an individual's or business's financial information to ensure accuracy and compliance with tax laws. While the prospect of an audit may be intimidating, it's essential to approach the situation calmly and methodically.

Types of Audits:

  1. Correspondence Audit: This is the least invasive type of audit, involving requests for specific documentation via mail.
  2. Office Audit: Taxpayers are asked to visit an IRS office, bringing relevant documentation with them.
  3. Field Audit: An IRS agent visits the taxpayer's place of business or home to conduct an audit in person.

Navigating an IRS Audit:

  1. Gather Documentation: Regardless of the type of audit, it's crucial to gather and organize all relevant financial documentation, including receipts, statements, and records.
  2. Consult a Professional: Engaging a tax professional, such as a certified public accountant (CPA) or tax attorney, can provide valuable guidance and representation during the audit process.
  3. Cooperate Fully: Respond promptly to IRS communications and provide accurate information. Cooperation can go a long way in facilitating a smoother audit.
  4. Appeal if Necessary: If the audit results in unfavorable findings, taxpayers have the right to appeal the decision through an IRS appeals process.


Paying back taxes on property and facing an IRS audit are undoubtedly challenging situations, but they are not insurmountable. Both scenarios require a proactive and informed approach, involving open communication with relevant authorities and, in some cases, seeking professional assistance. It's important for property owners to be aware of their rights and responsibilities to successfully navigate these financial hurdles and emerge on the path to financial recovery. Remember, being well-prepared and well-informed is the key to facing these challenges head-on and coming out stronger on the other side.