Many of my IRS clients are “Nonfilers,” they have unfiled tax returns. Some of my clients have not filed for multiple years – some, for many prior years. Sometimes, they take action because they (or a friend) heard my radio show or commercial. Most, however, wait until the IRS sends a Notice of Intent to Levy, or worse, Notice of Levy to their employer or bank. If you have unfiled tax returns there are four things you need to know.
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First, you need to know that not filing your tax returns is a crime, punishable by up to one year in prison for each year of unfiled tax return. Fortunately, the IRS doesn’t put a lot of taxpayers in jail for not filing tax returns. But, they do put some in jail. For example, Wesley Snipes was recently released after serving 3 years for failure to file. There is a statute of limitations for unfiled tax returns. The IRS will not be able to bring criminal charges after 6 years from the date the taxes are due. So, 2007 taxes that came due on April 15, 2008 are now beyond the statute, and the IRS can’t bring criminal action against you for unfiled tax returns 2007 and before. But, they still can collect any tax due.
Second, you should know that the IRS may complete your tax returns for you if you fail to file your tax return (it’s a penalty not a service). These are known as Substitute for Returns (SFR). When the IRS prepares your SFR, they will not include any deductions or exemptions. The result will be an inflated tax obligation. Penalties and interest are calculated based on the tax obligation. So, if the tax obligation is greatly inflated, so too will the penalties and interest. Don’t forget, the interest is calculated from the date the tax was due. So, the penalties and interest can add up to amount greater than the inflated tax obligation.
Third, the IRS will only allow you to recover any tax refund for 3 years. So, if you have any refund older than 3 years, the IRS will not refund OR credit your tax obligation for those years. For example, suppose a taxpayer hasn’t filed a return for years 2009 – 2014. Further, suppose, once the returns are complete, the taxpayer is due a refund for the years 2009 – 2011, but incurs an obligation for the most recent years 2012 – 2014. The refunds from the first three years will not be used to set off the tax obligations of the past three years. Those refunds are gone.
Finally, you need to know that, should the IRS levy your bank account or garnish your wages, it will be difficult to stop the levy before real damage is done. This is true because, generally, in order to stop a levy, the taxpayer must be in compliance. Compliance requires the taxpayer to have previous tax returns filed BEFORE the IRS will agree to stop taking your assets. If there are years of unfiled tax returns, it will take some time to get into compliance. Finding the records to prepare older returns can be a real problem.
There is some good news. Because the statute of limitations is six years, a taxpayer may not have to file all of their unfiled tax tax returns. In fact, it may be the worst thing you can do, because you may be creating a greater tax obligation then necessary. Remember, these are the older returns, so if a tax obligation is created, they will bring along a large penalty and interest burden as well.
More good news – if the IRS filed your tax returns for you (SFR) you can file the proper return to decrease you tax obligation. I have helped clients with more than $100,000.00 in tax obligations that disappeared when the corrected tax returns were filed and the SFR’s nullified.
Whatever you do, don’t duck the IRS if they should come calling. Enlist a tax pro if you’re unsure of how to respond to an audit notice.
Advance Tax Relief offers an experienced team of tax professionals who specialize in working directly with the IRS to solve difficult tax issues for businesses as well as individuals with back taxes or other tax issues. Contact us today at 800-790-8574 for more information or to schedule a consultation.
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So, if you have IRS Problems, Owe Taxes, have Past Due UnFiled Tax Returns – Take action today! You should work with a local tax relief firm. Call Advance Tax Relief (800) 790-8574
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If you think that you may need help filing your 2017 tax return and past due tax returns, you may want to partner with a reputable tax relief company who can help you get the max refund and reduce your chances for an IRS AUDIT.
Advance Tax Relief has a offices in Houston, TX and Los Angeles, CA and helps many individuals just like you work with the IRS to solve a wide variety of issues, including penalty waivers, wage garnishment release, bank levy release, tax audit representation, back tax return preparation and the IRS Fresh Start Initiative. Our Top Tax Attorneys, Accountants and Tax Experts are standing by ready to help you resolve or settle your IRS back taxes.
Call our team today at 800-790-8574 for more information. For a free consultation, schedule an appointment with us online.
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