Back Tax

Definition - What does Back Tax mean?

Back tax is the general term for any portion of any type of tax that a person owes in arrears. This can be in relation to property tax, income tax or business license tax.

Back taxes are always considered outstanding, due and legally payable. If a person with back taxes disagrees about the way in which the taxes were calculated or the overall amount, they can appeal the amount but would normally have to pay it anyway and then receive a rebate if it was found to be invalid or higher than it should have been.

Justipedia explains Back Tax

Failure to pay back taxes can result in jail time as well as property default. There is a special tax court that handles such cases and as long as a person pays within a set amount of time and is not too far behind, they will not be fined.

A tax examiner may be called in to review a tax file relating to either a person or a business.

Businesses that go bankrupt with back taxes owed end up having the taxes written off for certain types of companies. Other types of company setups mean that the owner of the company is personally liable for the outstanding back taxes separate to the company.

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