Many people simply do not file their tax returns, but the problems really begin as time passes, and subsequent returns are not filed. If you’ve missed your last tax return or have not filed one for a previous year or years, the good news is that things could work out if you figure out the best course of action. Getting in touch with a tax professional is a first great step in resolving the dilemma of non-filed returns, because sooner or later the IRS is going to start sending you letters.
Jail time is in fact a possibility for non-filing taxpayers, remote but possible. Penalties and interest are another major concern. Depending on how long it’s been since your missed filings, there may be a variety of options you can choose to file late and work out an agreement to pay back taxes or otherwise sort out the situation.
It’s important to note that the IRS has many actions it can take from their side. Besides contacting you and holding penalties over your head, the IRS can prepare and file your delinquent return for you. Let’s be clear here: that’s not a good thing and they’re not doing you any favors. A “substitute return” filed for you by the IRS will pretty much maximize the taxes you owe; they will not take any deductions on your behalf. Don’t count on any refunds when the IRS prepares your return. If you have not filed returns for many years, now the good news, if when you file that late return and are due a refund and it is more than three years from the due date you will not receive that refund. But if that same return shows a balance due you would have to pay the balance along with all of the penalties and interest. I have seen taxpayers lose tens of thousands of dollar in refunds because thy just never got around to filing. None of these people are every happy. When they recognize that their procrastination was not harmless, but in fact cost them thousands of dollars in refunds.
Don’t join that club because not one of those people were ever happy about that outcome.
Taxes can be a tough issue, and there are good reasons why people visit tax pros for advice and assistance. The IRS will only tell you the rules in a general sort of way, and they have little obligation to offer helpful advice. A tax advisor can help you explore your options available to potentially reduce the penalties, interest, and taxes that you face. Like any debt collectors, the IRS might even be willing to negotiate the penalties – but you need a tax professional by your side to have little leverage in negotiations.
It’s a frightening and stressful time when delinquent tax returns catch up with you. No one expects you to know all the best actions to take, but thankfully you can get the help you need from an expert tax pro.
Let us help. Contact us now to get started.