Should you pay the oldest year or current year of back taxes first?

Question

Should you pay the oldest year or current year of back taxes first?

Answer 1

I would pay the oldest but thats just me. Get it out of the way.

Answer 2

The oldest.  Interest and penalities accrue daily.

Answer 3

Always the oldest year because the interest and penalties would be higher on an older year.

Answer 4

You don't have a choice. They apply payments to the oldest. These have the highest amount of interest and penalties.

Answer 5

If you have the ability to make a choice, pay the newest first.  For federal taxes, late payment penalty accrues at the rate of from 1/4 to 1% per month up to 25%.  The penalty on old years may have maxed out so you want to keep it at a minimum by paying the newest assessments.  Additionally, if you find you need to file bankruptcy, taxes that came due and owing more than three years ago--that is 2004 right now--can be discharged and newer years can't so you want to pay the ones that would survive bankruptcy.