Unfiled Tax Returns

Every year the Internal Revenue Service requires taxpayers to file their document that reports all income to the Internal Revenue Service and pay any taxes owed on that income. For various, often justifiable reasons, well-meaning taxpayers do not file. This can leave a taxpayer open to substantial penalty and interest charges and will prevent the Internal Revenue Service from being open to working out a solution for most problems. It is therefore essential that all required past due years be filed.

Filing an unfiled return often requires more expertise and strategic planning than filing returns on time. First, if you have not yet been contacted about the year you missed, and it was due more than six years ago, the generally accepted approach is to not file that year at all. With a few exceptions, internal Internal Revenue Service policy is to not bother pursuing taxes that may be due that are more than six years old.

If you file, this will void the Internal Revenue Service policy and you are unnecessarily opening yourself up to potentially paying taxes that the IRS has for all intents and purposes, forgiven. The Internal Revenue Service is nevertheless still able to require returns that are more than six years old.

Second, in order to get into any type of agreement to resolve your tax debt with the Internal Revenue Service, the Internal Revenue Service requires that you be “compliant.” This means that you must have filed all your past due years, within the last six years. The approach to these returns differs from the approach one would take when filing on time. For instance, if you know you will not be able to pay the amount the Internal Revenue Service thinks you owe, it may not be worth your time sifting through all your old records and receipts in order to substantiate your expenses.

Trying to lower the amount you may owe on these past due years is not going to change what you can afford to pay. Additionally, the Internal Revenue Service will scrutinize an older past due return that claims expenses more closely than it would if the tax return was filed on time. This increases the chances of an audit or the Internal Revenue Service rejecting your claimed expenses. It is important that filings must be as accurate as possible and that your claimed expenses be supported by accurate records.

Another major complication with past due filings is timing and place to file. Often, taxpayers with unfiled returns are under immediate threat of levy or other adverse action. If this is the case, filing may be required in order to prevent the levy.

But it is vital that the documents be sent to the right location and more quickly than usual.  Depending on the circumstances, will have to be filed within specific timelines and at different locations. Do you live in the Dallas Area?

Contact us for legal help filing your unfiled returns.