As the 2025 tax filing season approaches, many taxpayers are preparing to file while still carrying unpaid tax balances from previous years. This situation is more common than most people realize, especially for individuals who experienced income changes, underpaid estimated taxes, or simply fell behind during a difficult financial period.
What often goes overlooked is that tax debt does not stay the same over time. Penalties and interest continue to accrue on unpaid balances, and each new filing season can bring additional consequences if those amounts remain unresolved. In some cases, filing a new return or expecting a refund can unexpectedly bring old tax debt back into focus.
Understanding how ongoing tax debt works, how it grows, and what happens during filing season can help taxpayers avoid unpleasant surprises and make more informed decisions. Before taking the next step, it’s important to understand what ongoing tax debt really means and why it deserves attention heading into the new tax year.
What Is Ongoing Tax Debt?
Ongoing tax debt refers to any unpaid balance that remains with the IRS after a tax return has been filed. This can include taxes owed from a prior year, a balance that was only partially paid, or amounts assessed later through notices or adjustments. Even if no new action has been taken, the debt remains active until it is fully resolved.
Many taxpayers are surprised to learn they still owe taxes because the original filing may feel “finished.” In reality, filing a return does not eliminate an unpaid balance. If the full amount was not paid by the deadline, the IRS continues to carry that balance forward, applying penalties and interest over time.
Ongoing tax debt can also affect future filing seasons. When a taxpayer files a new return while still owing from previous years, the existing balance does not disappear or reset. Instead, it becomes part of the broader financial picture the IRS considers moving forward, which is why understanding how unpaid tax debt behaves over time is so important.
How Unpaid Tax Debt Grows Over Time
Once a tax balance remains unpaid, it does not stay frozen in place. The IRS applies penalties and interest to unpaid tax debt, causing the total amount owed to increase as time passes. Even taxpayers who avoid additional enforcement actions may notice that their balance continues to rise year after year.
Interest accrues on unpaid taxes from the original due date of the return until the balance is paid in full. In addition, penalties may be added for failing to pay the full amount owed on time. While each charge may seem modest on its own, the combined effect can be significant, especially when a balance carries over from one tax year to the next.
This is why many taxpayers feel confused when they check their IRS account and see a higher balance than expected. Even without new tax assessments, ongoing tax debt can grow quietly in the background. Over time, this compounding effect can make resolving the debt more challenging, particularly as another filing season approaches.
What Happens When You File a New Return While Owing Back Taxes?
Many taxpayers hesitate to file a new tax return if they still owe from previous years, worrying that filing again will automatically make the situation worse. In reality, filing is still required, even when there is an existing unpaid balance. Failing to file can create additional penalties and complications on top of the debt that already exists.
When you file a new return while owing back taxes, the IRS does not erase or reset the prior balance. Instead, any existing tax debt remains active and continues to accrue penalties and interest. If the newly filed return shows an additional amount owed, that amount may be added to the overall balance. If the return shows a refund, the IRS may review how that refund is applied.
This process often catches taxpayers off guard because it brings past tax debt back into focus during filing season. While filing itself does not automatically trigger aggressive enforcement, it does reconnect unresolved balances with the current tax year, which is why understanding how refunds and payments are handled is an important next step.
How Tax Refunds Are Applied to Outstanding Tax Debt
For taxpayers who are expecting a refund, filing season can bring an unwelcome surprise when there is unresolved tax debt from prior years. In many cases, the IRS may apply a tax refund directly to an existing balance instead of issuing it to the taxpayer. This process is commonly referred to as a refund offset.
When a refund is applied to outstanding tax debt, it reduces the balance owed but does not eliminate any remaining penalties or interest. If the refund is smaller than the total balance, the unpaid portion continues to accrue. This can be frustrating for taxpayers who were counting on that refund for other financial needs.
Refund offsets often highlight how ongoing tax debt can quietly carry over from year to year. Even taxpayers who feel they are making progress may find that refunds are absorbed before they ever reach their bank account. Understanding how refunds are handled helps prevent confusion during filing season and reinforces why addressing unresolved tax balances sooner rather than later can make a meaningful difference.
Why Waiting Makes Tax Debt Harder to Resolve
One of the most challenging aspects of ongoing tax debt is that delaying action often limits future options. As penalties and interest continue to accrue, balances grow larger, which can make resolution more complex and financially burdensome over time. What may have been manageable early on can become far more difficult after multiple filing seasons pass.
Timing can play an important role in which tax relief options are available. In many cases, taxpayers who address their debt sooner may have more flexibility when pursuing solutions such as an Installment Agreement, or negotiated settlements like an Offer in Compromise. Waiting too long can reduce the likelihood of qualifying for certain programs or result in less favorable terms.
Working with a tax relief professional can help taxpayers understand which resolution strategies may apply to their specific situation. Professional guidance can also help ensure that options are evaluated correctly, deadlines are met, and communication with the IRS is handled properly. Addressing tax debt proactively often leads to clearer paths forward and more manageable outcomes than postponing action.
Addressing Ongoing Tax Debt Before It Snowballs
One thing is for certain, ongoing tax debt rarely resolves itself. Left unattended, balances can continue to grow quietly in the background, resurfacing each filing season through higher amounts owed or unexpected refund offsets. While it may be tempting to postpone dealing with tax debt, early action often leads to more favorable outcomes and greater flexibility.
The 2025 tax filing season is an opportunity to take a clearer look at unresolved tax obligations and understand which resolution options may be available. With professional guidance, taxpayers may be able to reduce penalties, establish manageable payment arrangements, or pursue solutions that bring long-term relief.
If you find yourself with ongoing tax debt, it’s very likely that you have options to reduce what you owe. Reach out to our team today to discuss your options and let this year be the year that you put it behind you for good!
